TAX TIP OF THE WEEK - Shutting down a business that didn't work out?
A company you set up didn’t work out and now you want to shut it down. Will HMRC still insist you submit accounts and tax returns for that final period.
As a general rule HMRC expects full accounts and corporation tax returns for all periods in which a company is active, even if there is little of nothing to show. Failure to do so will mean fines and penalties. ☠️
Where your winding a company up due to it not being feasible the last thing you are likely to want to incur is additional accountancy fees for preparing accounts and returns. 😩
Good news is that as long as a company has completely ceased trading for a period of 3 months HMRC will consider forgoing returns as long as they are happy there is no tax at stake, 💰
So once the company has ceased trading, wait a period of 3 months and send HMRC a set of informal or management accounts showing the company position. In this situation, HMRC should allow the closure of the corporation tax account without the need for formal returns. 📜
This exception can save you time and money which would be better put to use on your next venture.
I hope this was helpful, for lots more tax tips and strategies get a copy of our 71 ways to save tax checklist.