Limited companies make a common mistake that is done by directors when closing their limited company by sending a strike-off form to Companies House.
When a director or the directors decide to bring the business to an end, there are several compliance issues to be carried out so as to prevent tax compliance issues in future.
I will like to suggest the following steps that could be of use to you in the event of closing your limited company.
1. Preparing final accounts and informing HMRC of the intention of closing the limited company.
When a limited company closes down, it automatically brings the chargeable accounting period to an end.
The last accounts have to be prepared and submitted to HMRC.
The directors are liable to pay the final tax or make payment plan arrangements with HMRC.
2. Disposal of the assets of the limited company while closing the Limited company.
This can be done either by distribution to the directors and shareholders or sold to an unconnected person.
When the asset is transferred to the directors for no consideration, it must be transferred at the lower market value at the date of transfer and the cost. However, the dividend must be treated as a dividend in specie to the shareholders.
However, if the assets are disposed to an unconnected person, the consideration that would be declared to HMRC is the lower cost and actual consideration.
This may give rise to a balance charge or balance allowance.
3. Preparing and submitting your last self-assessment return before closing your limited company.
The directors and shareholders are usually expected to register and submit tax returns year every year if the company is active, they receive dividends and benefits in kind.
The directors are expected to submit their last tax return and inform HMRC of the closing of the company on the self-assessment return.
The implication of this is the last return is submitted and the requirement to submit future returns is cancelled.
4. Preparing your last Vat Return if applicable and payments before closing your limited company.
Another compliance issue is your VAT.
The final VAT returns have to be submitted and the business would need to deregister. Arrangement for Final payment will need to be made.
5. Preparing last PAYE returns and making payment plans before closing your limited company.
The directors would also have to submit their final PAYE real-time submission if this is applicable to the business and also make outstanding payments or make arrangements for payment.
6. Method of closing the company.
The directors can dissolve the company either by liquidation or strike off from the company’s house.
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