Winding up a Limited Company

jewels.p
jewels.p Registered Posts: 1,774
Hi,

Can someone please help me with this as one of my Bosses has asked me this but I am not sure.

He is a Shareholder of a Limited Company that is to be wound up in September of this year. There are some funds in the Bank Account. He said that after all the Creditors etc have been paid off there will be a surplus amount to be split between the Shareholders. He asked me is he allowed to give his Daughter the funds and pay it into her account or does he first have to pay it into his account and pay tax on it. She is on Self-Assessment. And if this is legal does she have to declare it as income.

Also he is a Shareholder in another limited company that has done no business in the past year and they want to wind that up too. He has been told that there is a form you can download from online at Companies House and you can wind it up that way. Is this true? I didnt think it would be that easy.

Many thanks for any advice as I dont want to give him the wrong information.

Comments

  • acastudentmaat
    acastudentmaat Registered Posts: 16 Dedicated contributor ? ? ?
    In answer to your second question you can use Companies House form DS01 - Striking off application by a company.

    I can't help with the first question.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    jewels.p wrote: »
    Is this true? I didnt think it would be that easy.
    Yes it is and yes it can be.

    Re the first query:

    If he is the shareholder, then he is the recipient of the money. Even if he pays it straight into his daughter's account, it's not her money - it is his, and he has given it to her as a gift. So it's taxable on him, not on her. He could transfer his shares to her but this may have CGT implications. If the sums are material then he should seek specialist advice.

    Have they looked at getting an ESC16 agreement?
  • jewels.p
    jewels.p Registered Posts: 1,774
    Thanks for the replies that has helped.

    Monsoon can you tell me what is an ESC16? (Oh god I feel thick now ha ha) I haven't had any dealings with this before!
  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    Sorry for hijacking but I think (monsoon please correct me if I'm wrong) that ESC (Extra Statutory Concession) C16 is an agreement with HMRC that funds can be withdrawn from the company and be treated as capital, not income, and taxed under CGT rules; rather than having to wait for the formal cessation of the company and the administrators to distribute the assets. But there is a limit of £25k.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Gem's right.

    Jewels - if you highlight the words "ESC16" and right click (if you're in a decent browser like Firefox) then there should be an option to "Search google for "ESC16." Either that or you can copy and paste into a search bar. You will then be able to find official guidance on these things, as well as professionally written articles, which will help you research new things :)

    I use google all the time to find answers to things - I would be utterly scuppered without it!

    But yes, Gem has it in a nutshell :)
  • jewels.p
    jewels.p Registered Posts: 1,774
    Thanks guys that's a great help!

    Great advice as usual on here.:thumbup1:
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