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Original poster

Anyone closed a company down?

11 replies

Maisysmum1 · 28/04/2021 21:16

Hello :)

I set up a limited company in November 2019 to provide small businesses support on compliance matter. Everything was fantastic... Until covid. I've kept going for the last 12mths, took 10k from Natwest with the bounce back scheme to keep me going. Unfortunately I have had no business now for the past 3mths. The clients I had cannot afford my services anymore and I'm struggling to make ends meet. I have been offered a full time job by an old employer which I'm going to accept. I can't keep going as I have.

I need to shut my LTD company down but my accounts lady said I need to make it insolvent as it has a 10k debt attached to it. She's currently recovering from long covid so I don't want to ask her a ton of questions. Anyone have any experience where I start and an idea of cost. I've read it can be 3k I just don't have that :'( this is really effecting my mental health I'm unsure where to start.

Any advice would be so welcome

OP posts:
Highlandspring1991 · 28/04/2021 22:42

Could you not make company dormant instead of shutting down completely

Doorhandleghost · 28/04/2021 23:19

Firstly accept the job - the status of your ltd company shouldn’t affect that.

If the company is insolvent it needs to be formally liquidated. You can do that via an insolvency practitioner (creditors’ voluntary liquidation) or through the court/insolvency service (compulsory liquidation). Through the the court is cheaper. You can also wait for the creditor to petition the court for the company to be wound up - basically just leave it and ignore any correspondence your get (not the most ethical approach but it is an option).

Making an insolvent company dormant is dishonest.

Remember though - you aren’t personally liable for the debts of the ltd company, unless you signed a personal guarantee. Don’t pay anything you aren’t personally liable for.

savvy7 · 29/04/2021 11:40

Great, let the tax payer pick up the tab

user1497207191 · 29/04/2021 11:43

What did you do with the £10k BBL? If you paid it to yourself to cover your own personal costs, you may well be liable to pay it back to your company who in turn can repay the bank loan. That's because unless you paid yourself fully via PAYE and paid tax/NIC on the amounts drawn it'll be a "loan" from the company to yourself which does make you personally liable to repay that "loan".

user1497207191 · 29/04/2021 11:44

@savvy7

Great, let the tax payer pick up the tab
If Rishi had put in proper Covid support for limited company directors rather than "excluding" them, they wouldn't have needed loans to survive. I don't recall that the millions of people who received furlough will have to pay it back as "loans".
user1497207191 · 29/04/2021 11:46

This is what may make the OP personally liable to the bank:-

www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/faqs-for-small-businesses/#f15

"The business must confirm to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, and not for personal purposes."

savvy7 · 29/04/2021 11:53

If you're a limited company director and benefit from the associated tax breaks, you have to accept the additional responsibilities that go with it.

Too many people get themselves in hot water, liquidate, leave others high and dry and set up as a different limited company, and so on ...

user1497207191 · 29/04/2021 12:00

@savvy7

If you're a limited company director and benefit from the associated tax breaks, you have to accept the additional responsibilities that go with it.

Too many people get themselves in hot water, liquidate, leave others high and dry and set up as a different limited company, and so on ...

Very harsh. Lots of people don't have a choice - some professions require a limited company to be used to trade, some clients/customers insist on their "suppliers" being limited companies. The woeful Covid support for limited company directors (due to idiotic Rishi not understanding) will cause huge numbers of people to be in the OP's position.
user1497207191 · 29/04/2021 12:02

And actually, the "tax" breaks are a lot less generous than they used to be and a small low earning "one man" limited company can end up worse off than if they were a sole trader. The days of Gordon Brown's low tax generosity to limited companies is long over.

savvy7 · 29/04/2021 12:09

Harsh yes but often true. Anyway, my point was directed at the "Don’t pay anything you aren’t personally liable for" = let some other poor sod pick up the tab. What if that other poor sod is another one man band limited company??

Hoppinggreen · 29/04/2021 16:51

If you used the 10k loan to pay yourself you may have an issue as it’s not supposed to be used for that
I can totally understand why people did but it may cause a problem if paying yourself has made the company insolvent

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