The client
Our client was a contractor who had initially started a limited company to maximise their earnings.
With the incoming change in legislation known as IR35, the Government is seeking to stop the practice of limited companies with one employee essentially working for a bigger company – and enjoying the tax benefits of withdrawing dividends at a lower tax rate than a standard salary.
Our client had already secured a PAYE job but needed to close the company to comply with the upcoming change of law and to settle their tax affairs.
The challenge
The business had a relatively low turnover of £15,000 a year, and the client had taken £8,000 in dividends but owed HMRC £2,000 in Corporation Tax, with £3,000 left in the bank.
We needed to close the limited company while securing the maximum financial benefit to the client.
The result
After settling the Corporation Tax with HMRC, we identified that the company balance could be transferred to the client’s personal bank account. In addition, that remaining sum could be declared in a Self-Assessment Tax Return, securing the best possible financial result for the client.
We then submitted a DS01 form, which led to the company being struck off the Companies House register.
This swift action was well received, with our client leaving the following Trustpilot review:
Very friendly and efficient team! Kept me updated throughout the whole journey. Very happy about choosing this company! Highly recommend!
If you are a contractor with a limited company and are unsure of whether your company will need to close ahead of the changes to the IR35 law, then get in touch with our helpful team or read this blog post on how to close down a limited company in the UK.