Limited Company closure

[WTF202333]

During separation my ExH has closed down his limited company and opened a new one (same work, just a different name) I was a 50% shareholder in the original company - should I have been informed of the closure and paid a closing dividend?

I think you were owed a share of the company's assets https://www.gov.uk/strike-off-your-company-from-companies-register/close-down-your-company Were you a 50:50 shareholder with your ExH? Do you have a solicitor managing the divorce?

That said, has he closed it down or allowed it to go dormant? What status can you see on the Companies House website?

@tribpot thank you for your response.
Yes, he has actually closed it down (dissolution) - I think he done this as he thought I may have more of a claim on ‘the company’ through divorce. I’ve never been paid any dividends previously though (any I am aware of anyway!)

Hmm something very amiss with this. The company never paid out any dividends? (As in, to anyone). What would have been the point of you owning a share of it if so 😵‍💫

I'm sure he has done this to try and hide assets during the divorce, so it's definitely one for your solicitor.

Is it a business as in has employees etc or is it just him?

He shouldn't have closed it down without informing shareholders - the official process for a solvent company is called a "members voluntary liquidation". Any debts are settled and the proceeds of the assets are distributed between the shareholders (members).

Also - you can restrict shares so they don't have rights eg to voting or to dividends, so it's not a given that you were entitled to receive them. You'd have to check the articles of association.

What you do now though - it's difficult to get at a company that no longer exists. I'd say the company accountant is probably the place to start. As a shareholder of the company you're entitled to see the records - ask for the last set of full accounts (not the redacted accounts filed at companies house). Then you can see what's likely been transferred to NewCo. The accountants name should (hopefully) be on the accounts available at companies house.

The accounts will show you assets, debts and dividends (and whom they were attributed to...)

Has he just submitted a DS01 form? That form specifically states "You must send copies of this application to all notifiable parties e.g. creditors, employees, shareholders... within 7 days from the day on which the application is made".

I would suggest checking the online records to see whether you were still listed as a Shareholder in the latest confirmation statement.

If the company is still in the "Action to strike off" phase you can lodge a formal objection to the strike off.

If you want me to look at the accounts and Companies House register in more detail, drop me a DM with the name and I'll take a look.

Do let your solicitor know though as this will not look good for your STBXH.

Don't see why anyone would name someone else on an Ltd company these days except for tax purposes.

Back in the old days I think the company secretary and sole director had to be separate so there had to be two people, but nowadays its not the case.

If you have a non working spouse then I think there is some taxation benefit - you could use up the non working spouses personal allowance as salary, plus dividend allowance/lower dividend taxation.

Be interesting to see whether he has done this and what the consequences are.

You also might have some claims over workplace pensions - I don't know what the rules are but you may have to explicitly reject one of these.

@WTF202333 I have sent you a message back

Re workplace pension - as a sole director the company isn't required to have a workplace pension. The company could, however, have been making payments to a personal pension, which is definitely up for discussion.

@GasPanic is right though - we often advise our clients it's tax efficient to split the shares with their spouses to maximise any personal allowance use. We do always make the comment though that if they were to split up, they'd have an automatic right to half the company!

@MooMooSharoo thank you for your message, the information is really helpful.

I genuinely don’t want nor expect half of his company. The difficulty I’m facing at the moment is that he earns £100k + through this limited company and declares £20k through paye as his earnings. During divorce proceedings he has messed me around paying zero or minuscule ‘child support’ He and his solicitor point me in the direction of CMS, knowing I would get £300ish for two children.

In sure he’ll have to declare his Director dividends as part of his income? If you’re a shareholder are you down as an employee too?

I don't know how it would work re workplace pensions.

You are right as a sole director/employee you do not need a workplace pension.

However, if you are using the tax allowances of your spouse to take money out of the business then that spouse is effectively an employee of the business (the accounts should show 2 employees).

Whether they are classed as a worker or not and are entitled to a workplace pension (or explicitly have to reject a workplace pension) as a result I can't find any clear information on.

I guess if you use two peoples allowances (personal tax allowance, dividend allowance and reduced dividend tax rate) then you could remove about 100K from a business pa with two people at a much better rate (dividend tax at the lower rate 8.75% up to approx. 40K of dividends each plus the 10K personal allowance at 0% for each person =50k each) while maintaining your state pension entitlement.

As a single person you would have to pay 37.5% tax on the dividends over about 40k. I think it would be a lot. Almost 20k extra p.a based on back of an envelope calc. I guess .... :)

A shareholder isn't necessarily an employee, so OP can have been a shareholder, but not earning a salary from the company. I have seen the company's accounts, which do state there is only 1 employee (OPs STBXH).

And CMS calculations can include any dividend income he has as well as salaries. You just have to ask for extra income to be taken in to account - HMRC link

I have a client that wanted me to figure out whether he would have to pay less CMS if he was on a salary versus his dividends.

The calculations seemed to work out quite equal as salary would generate a higher personal tax bill, so his salary would be higher than his dividends to generate the same monthly income.

The CMS calculation on the higher salary was very similar to what he was already paying based on dividends, so the system did seem to work OK in this respect.

(And yes - I lost a lot of respect for that client for asking me to do the calculations!)

If, however, OP's STBXH dividends are reduced because he's been declaring half of them as OP's dividends, then that could cause a miscalculation in his CMS claim, but in future if he accounted for them all as his own income the CMS figure should go up.

He will likely try and keep his official income to an absolute minimum to avoid paying too much maintenance though.

40 years ago, my aunt’s husband did exactly this. She took him on in court and won, but I forget exactly whether it was 50% of new company shares or whether he was forced to buy her out