Ltd to SoleTrader

ademoore

Morning all, loving the new look around here!

Please could someone read through the below and let me know if it raises any eyebrows of concern! Thanks.

Have a nightmare client - They want to move from Ltd back to ST (which would suit them better!)

The bank have agreed to transfer loan and overdraft facilities to a new bank account in ST name.

They have an outstanding Director Loan in the region of £6k, and some vehicles on BS at about £7k.

Suppliers and customers should be to nil as money exchanges pretty quickly.

Only one creditor will remain on books, which is HMRC after they agreed client could spread PAYE liability over a year in instalments.

I was going to ensure enough money going in to account to cover that bill to let it finish and have vehicles valued and sold to ST business.

The company will therefore be ticking over with very small amounts to one side, whilst main bulk of business will be taken across to ST.

Is there anything here which would raise alarm bells, either in principle or from a tax point of view?

Thanks in advance

Monsoon

Sounds ok to me. The assets need selling to the ST as you've said. I'm assuming there's nothing else on the BS that needs addressing?

Is the director going to repay his loan to the company? I assume there's no residue in the P&L account?

ademoore

No residue at all, unfortunately, and no money to pay it back right now either.
I'd be tempted to leave it there, have him run a few customers off the ltd, and let him use his mileage to bring it down further to the point he can clear it? What do you think?