I'm sure this topic has been covered but I struggled to find anything specific so I thought I'd start a post.
I have a small ltd company which has made around £500 profit for the year. I have had a letter from HMRC regarding corporation tax. I have not paid any corporation tax as of yet. So would I pay the tax on this and then the rest be available to take as a dividend?
I no longer want to run the company and would like to close up. How would I go about this? Also what are the tax implications?
Would I be best to take a final dividend?
How do I wind up the company?
Sorry if this is basic stuff but I want to be entirely sure.
Whilst I can't give you specific advice, I will certainly guide you in the right direction.
But first, have you submitted your accounts to HMRC, with a tax computation? That would have given you the exact amount which was due, and needs to be paid 9 months and 1 day after the year end. Ditto you should also have done a filing with Companies House (usually on the same form as the HMRC one)
If you've done that Bobs your Uncle and you can take the remainder as a dividend. No personal tax to pay as it's under the 2k tax free limit.
Could you answer the following questions please? Does the Company owe any money out? Do you have any assets?
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi,
Thank you for the reply and sorry for the long delay in getting back to you.
So my profits are £522.40, I believe the corporation tax is £99. Could someone confirm I have this right please?
The company has no assets or liabilities, it was an events company.
I have not submitted the accounts yet.
I have just created the profit and loss, balance sheet, dividend voucher and meeting minutes.
What is the process i should follow?
Submit the accounts and then do i dissolve the business or do I do it in one go?
Thanks so much in advance for your help, it is greatly appreciated
Hi, Thank you for the reply and sorry for the long delay in getting back to you. So my profits are £522.40, I believe the corporation tax is £99. Could someone confirm I have this right please? The company has no assets or liabilities, it was an events company. I have not submitted the accounts yet. I have just created the profit and loss, balance sheet, dividend voucher and meeting minutes. What is the process i should follow? Submit the accounts and then do i dissolve the business or do I do it in one go? Thanks so much in advance for your help, it is greatly appreciated
You want a professional to confirm your figures without seeing your figures? Without the detail backing up those figures? without full facts? without seeing any potential tax adjustments?without taking our fee? Or are you just asking someone to check your maths? Your accounts are incorrect. Of course you have assets and liabilities. If you are to keep going on the diy process you need to spend more time reading up on the process and legalities or just submit and take the rap if they come after you. Or if you want to do it correctly then pay someone who knows what they are doing. Bookeepers are not charities. Although you could try the CAB.
-- Edited by YouAreATit on Monday 5th of October 2020 08:15:25 AM
John, thanks for getting back to me... a much friendlier reply than some.
No money is owed, INCORRECT there were only the following transactions
Sales Purchases Travel expense interest received entertaining costs
the only creditor is HMRC. INCORRECT
There are no fixed assets - the only asset is the current asset of cash.
I now know i should have registered as self employed WRONG! UNLESS YOU ARE MISSING SOMETHING ELSE OUT but thats a life lesson.
I have also looked into studying AAT Level 2 - would anyone recommend this as a good starting point? TO WHAT END?
YOU ALSO HAVE ADJUSTMENT TO MAKE TO TAX
Thank you
You haven't mentioned any thing about what period you are covering, if it's your first year, how many returns HMRC are expecting, ignoring co house for a minute.
I don't think having a sly dig at someone for making valid comments is appropriate. just because you don't like their valid response.
John, thanks for getting back to me... a much friendlier reply than some.
No money is owed, INCORRECT
This response was to a question I asked, about money owed other than tax.
there were only the following transactions
Sales Purchases Travel expense interest received entertaining costs
the only creditor is HMRC. INCORRECT
Who else is a creditor?
There are no fixed assets - the only asset is the current asset of cash.
I now know i should have registered as self employed WRONG! UNLESS YOU ARE MISSING SOMETHING ELSE OUT but thats a life lesson.
What a strange response, why is it wrong? I'm not saying it isn't, but you can't make a blanket statement without knowing the circumstances. Many people set up a Ltd Company when they would be better off being self employed. A prime example is it will cost the OP £600-£1000 to get an accountant to do the Company tax return, or between £250-£300 had he been a sole trader. Running a Ltd Company carries legal responsibilities that a sole trader doesn't. Unless his profit is more than £25000 a year then, unless he wants it for liability protection or certain sectors, there is no point.
I have also looked into studying AAT Level 2 - would anyone recommend this as a good starting point? TO WHAT END?
Er, to understand accounts better?
YOU ALSO HAVE ADJUSTMENT TO MAKE TO TAX
More than likely
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
John, thanks for getting back to me... a much friendlier reply than some.
No money is owed, there were only the following transactions
Sales Purchases Travel expense interest received entertaining costs
the only creditor is HMRC.
There are no fixed assets - the only asset is the current asset of cash.
I now know i should have registered as self employed but thats a life lesson.
I have also looked into studying AAT Level 2 - would anyone recommend this as a good starting point?
Thank you
I don't think the other response you got before your reply was unfriendly, simply making some pertinent points. What I did was to take a more benevolent approach which others may well disagree with. That's my personal choice though.
The tax will be higher, as entertainment costs are disallowed for tax purposes.
As stated in my reply to BMM, the costs of getting an accountant to check the accounts and submit the return will more than likely wipe out your profit plus some.
If you want to send me a PM (go to my profile) I am happy to make a suggestion that will appease the taxman without costing you money. along with how you go about closing the Company.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
no time to get involved in these at the min, just keep an eye on them to ensure that they don't get out of hand. On a side note I think that we will see a lot of closures of small Ltd's over the next six months as looks as though the Governments foolish detmination to destroy the gig economy through the ill conceived IR35 legislation changes will finally drive those last few coffin nails home.
Big business will not deal with the self employed so many of those currently working through PSC's will become employee's of umbrella companies. A couple of reasons for keeping their companies is for those working with micro entities where IR35 does not apply in the same way and where people have executive pensions tied to their companies that may be more difficult to move out than personal pensions.
Anyway, can't stop, just wanted to say that closing one man limiteds may become a lot more common over the next six months to a year than it has been previously.
All the best matey and keep up the good work,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
