Jennifer Adams considers the tax position for a director shareholder when the time comes to say goodbye to the company.
The closure of a company can be costly, and there will be various practical financial matters to attend to: for example, if there are staff they may be entitled to redundancy pay; there will possibly be VAT deregistration; the submission of final accounts and tax returns to HMRC (Companies House does not require final accounts); making final creditor payments (possibly including to HMRC); ensuring all debtors have paid; possibly selling company assets; and finally closing the bank account.
However, for a director shareholder, an important consideration will be how to withdraw any accumulated profits tax-efficiently.
Distribution less than £25,000
Usually, when a company distributes its profits to shareholders, the recipient is
