Client opened LTD but has been keeping records as a sole trader/ self assessment

0149witty Registered, FMAAT, AAT Licensed Accountant Posts: 16
Seeking advise as to if you can legally close down a ltd company in the following situation.
The client did not know what different types of company’s there are and he just opened a ltd company. He has been trading as a sole trader for self assessment and has been taking money each week as a wage. He has no assets and did not inject any capital, he does not have any liabilities. Very straight forward income from one company for various jobs and just travel expenses.
He has not done any PAYE as he did not realise that he should have been doing this. From the paperwork he has given me I can see that he has been incorporated since July last year and has registered to pay employees but has not done anything else.
If anyone could give advise as to what would be the best way to sort out this mess I would be most grateful.


  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    edited May 2019
    How did your client invoice their customers? Was it made in the name of the ltd co or him personally? Where was the money received- in his personal or ltd co account?
  • 0149witty
    0149witty Registered, FMAAT, AAT Licensed Accountant Posts: 16
    thanks for your response Marie Noelle,

    Ltd, so I don't think he can close the Ltd company without doing a full set of accounts or moving from LTD to sole trader.
    my next issue is that he has been taking pay for himself each week but has not done anything through PAYE.
    I don't do payroll, so I am not up to date on every thing. Am I correct in thinking he needs to get this done ASAP as he is going to have penalties and interest to pay on the unpaid tax and IN for not doing them. Also did PAYE come into force from 31.01.19 so he will have penalties from this date on wards.
  • FAC
    FAC Registered Posts: 17
    If your client has not used the company name to invoice his/her customer and made no purchases under name of company, he can consider himself as sole trader for tax purpose.

    If client tegistered for PAYE and submitted no RTI within 90 days, it would close automatically anyway. There is nothing to worry about PAYE scheme.

    If he has operated solely under his name he is sole trade. All money he has taken as wages are anyway his own.

    Company can be left as dormant during the whole accounting period while he make business as sole trader or he can start trading under company and register for corporation tax from trade start date.
  • 0149witty
    0149witty Registered, FMAAT, AAT Licensed Accountant Posts: 16
    Thank you for the response.
    Unfortunately he has invoiced as ltd.
    No RTI has been submitted
  • FAC
    FAC Registered Posts: 17
    In that case, check with HMRC if PAYE scheme is still open, if open submit RTI for from 6 April 19 to present. For payments falling in 2018/19 you can submit Early Year Update using HMRC PAYE tool. That will clear your wages payments issues.

    We admitted a client late last year , his previous Accountants overlooked the payroll and did not submit any RTI while director withdrew money for his wages, we prepare RTI for him and submitted all of them, no penalty or interest he was charged.
  • 0149witty
    0149witty Registered, FMAAT, AAT Licensed Accountant Posts: 16
    Thanks for the advise, this is back from October last year so he will have a few to go through. I don’t do anything with payroll so I think I am going to take him to see someone who can do it for him. Also now I have gone through all his paperwork I think he might be ir35. So I think I need to get his contract checked. Any advice would be greatly received
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