This is a simpler and cheaper method and is ideal for closing down companies.
In a typical case of a solvent company the steps would be as follows:
1.The company should cease trading and carry out no further transactions, except those which are necessary to close it down.
2.If any vehicles or equipment have been bought on any form of hire purchase, leasing or finance agreement, then the finance company should be contacted to establish the options for ending the agreement early.
3.The company must apply to HM Revenue & Customs to (HMRC) have its VAT registration cancelled,
4.If the company employs staff they should be issued notice and a final payroll run for them (bearing in mind that they may have redundancy payments due to them) and P45s issued. At some point the company will need to make a final P35 return of payroll information to HMRC.
5.Any of the directors and the company secretary may wish to resign, though at least one director should remain in place to deal with the closure. Remaining as an unpaid director of the company should not affect their own personal taxes in any way.
6. A final set of accounts should be prepared, and submitted to HMRC. However this is unlikely to be possible immediately after the company stops trading as there will be further expenses so a letter should be sent to the tax office informing them that the company has stopped trading, has no further taxable income, and will apply for dissolution in due course.
7.Any money or equipment left in the company after all these expenses have been met should be paid out to the shareholders in proportion to their shareholdings. It may be worthwhile for the company to apply to HMRC to have such payments treated under Extra Statutory Concession C16. This treats all such final payments as capital gains instead of dividends and may result in less tax being due.
If you want to know more about company closures or have any other queries regarding company financial problems you can visit www.howtoclosecompany.co.uk
