Can An Accountant Close My Company Overview
The answer to the question Can An Accountant Close My Company For Me? is yes, provided the accountant is also a Licensed Insolvency Practitioner if Liquidation is part of the closing down procedures. Liquidation is a formal insolvency procedure set out in Part IV of the Insolvency Act 1986.
It can be very useful to have access to the advice of an accountant for Directors to be kept appraised of the financial position of a company and to be aware of its tax liabilities.
The benefit of such advice can be invaluable to ensure that Directors keep their company’s accounts and tax affairs fully compliant. However, if it is either desired or required for a Limited company to close then the accountant may not be able to complete the process, particularly if a Liquidation is required. Whilst an accountant may be able to assist the Liquidator such as through preparing the Statement of Affairs in a Voluntary Liquidation (an important document in the Liquidation process); only if they are an Insolvency Practitioner will they be able to accept the Liquidation appointment itself.
How Can A Limited Company Be Closed?
In order to close a Limited Liabilty Company the starting point is to assess whether the company is solvent or insolvent. One way to consider this is to have an accountant prepare an up to date set of accounts to see if the balance sheet (statement of wealth) shows the company with more or less assets compared to liabilities. If the net asset position is negative then the company is insolvent. The other test of solvency is based on cash flow ie. can the company pay its debts when they fall due.
The other matter to consider is the level of the company’s assets and overall complexity. The more complicated the company is then the more reason when it is solvent there might be to appoint a Liquidator. If the company is insolvent it will usually require a Liquidator to wind it up.
Dissolving The Company Using Your Accountant
If the company is solvent and has assets of £25,000 or less and provided it has no debts still to pay then using the DS01 form to strike off and dissolve a company may enable it to be closed by an accountant who does not need to be an Insolvency Practitioner. It is a relatively inexpensive and uncomplicated process in terms of the cost of the filing of the form to dissolve the company.
Such a distribution is treated in light of Section 1030A of the Corporation Tax 2010 as a capital distribution with the potential tax benefits that can arise instead of being treated as income.
The dissolution or striking off of a company involves winding it down using the Companies House procedure. If there are no objections then it will be dissolved.
Members Voluntary Liquidation To Close My Company
If the company has assets in excess of £25,000 then in order to take advantage of potential tax advantages arising from a distribution of the assets to the shareholders (the owners) of the company then closing the Limited company would require it to be placed into Members Voluntary Liquidation.
The advantage is that such a method of winding up the company will mean that a distribution of the assets by the Liquidator to the owners will usually be taxed at a rate of up to 20% of the capital gain. If you qualify for what is known as Business Asset Disposal Relief (formerly referred to as Entrepreneurs’ Relief), the effective rate of tax can drop to 10%. Even if you do not qualify this can still mean a substantial tax saving compared to drawing the money out of the company as a dividend.
In order to undertake the process properly you will probably want to instruct your accountant to help make the process as simple and straightforward as possible by getting all the compliance ducks in a row such as filing cessation accounts and the final tax returns for corporation tax and any other taxes such as VAT, PAYE etc. This should speed up the process of the Members Voluntary Liquidation and potentially reduce the costs you might have to pay a Liquidator.
Creditors Voluntary Liquidation To Close Down My Company
Creditors Voluntary Liquidation is the process most commonly used to close down insolvent Limited companies.
An accountant cannot close a company via Creditors’ Voluntary Liquidation but they can certainly support the Directors and the Liquidator in making the process smooth and organised.
Accounting and other information are required to prepare the Statement of Affairs and SIP 6 Report for Creditors. The accountant can be invaluable to assist with the provision of information for those two documents. Some accountants may even prepare for the Directors substantial elements of those documents but the whole process needs to be overseen by an Insolvency Practitioner who has to be appointed as the Liquidator to take the Liquidation forward in winding up the company and eventually organising the route for it to be removed from Companies House.
Compulsory Liquidation To Close Down My Company
Although rather less common, it is possible for Directors to initiate a Liquidation via the Compulsory Liquidation route.
If the company is insolvent and cannot afford to pay for a Creditors Voluntary Liquidation, then it is possible this might be a cheaper option to wind up a company but there will usually be legal fees to pay.
It is a process that will usually not be supported heavily by an accountant as it is controlled by the Court and which will ultimately lead to the appointment of the Official Receiver (a government civil servant employed by the Insolvency Service) to act as the Liquidator.
It is commonly a process that might be deployed by Directors who are in dispute through a process known as a Just and Equitable Winding Up.
