Issues regarding closing limited companies
It has been noted in recent months that more attempts to strike off Limited Companies are being objected to, as some company owners/directors seek to avoid paying tax debts or loans, especially Bounce Back Loans.
Directors should only apply to have their companies struck off the register if they have no outstanding liabilities, such as unpaid taxes owed to HMRC, Covid-related loans or money owed to staff or suppliers.
Directors who try to have their companies dissolved without settling their debts are risking severe penalties and criminal sanctions.
Directors could be personally liable for the bounce back loan if misconduct is proved. HMRC can also shift liability for tax debts onto directors if they don’t adhere to their legal responsibilities.
Directors who wish to close a company with debts should undertake a formal insolvency process known as a creditors’ voluntary liquidation (CVL). During a CVL an insolvency practitioner will be appointed. Any assets in the company will be liquidated and distributed to outstanding creditors on a proportional basis and remaining debts written off.
If you have concerns about the future of your Limited Company and wish to speak to someone about your options, please contact Matthews Hanton.