Closing a business- Involuntary Strike off (or maybe voluntary).

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Cubaintime

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Hi,

In June 2020 I cased trading under my Ltd Co. Long story but in good faith I deregistered for VAT Dec 19. Our lease was up and landlord gave the unit to another tenant (my understanding is this business is owned by board of management. We were promised a new unit but last minute they increased the rent x 2). I decided to close as at that point I couldn't find another unit suitable and our online business was not strong enough. We were due to vacate in March and I notified my accountant I decided to close. Covid hit- new tenant couldn't move in. We couldn't get access for one month and I then continued to trade online only. With lockdowns etc us vacating took much longer and long story short we exceed the VAT threshold as online sales were obviously much higher due to covid. In the meantime as online was so strong and a unit in NI came up I set up a new UK company and began trading under that from July 1st.

My predicament is - and I stupidly overlooked the fact that I exceed the VAT threshold. Last year was such a rollercoaster that it didn't even cross my mind until my accountant called me. My accountant suggested I might be best leaving things to be struck off. I'm worried about the ramifications of this- ltd liability goes out the window etc. To put it into perspective I can file my accounts and pay the small corporation tax I'm liable for. I have no debts. But if I file and also submit my B1 I guess a red flag will be raised. Or am I better to engage with revenue on this and try to go down the route of voluntary strike off? I understand my excuse won't wash with them as such but can I negotiate with them- the old co doesn't have any money as such as the new company is very lean- ticking over, no debts but just pays a pretty average salary and I have one PT worker.

My accountant said he can't officially advise but small micro businesses are more than likely to be struck off involuntarily without any legal action but it sounds a little risky and not sure what the worst that could happen is if I was unlucky
 
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How did the transition from old company to new company work? In terms of debtors, creditors, stock, brand name / website etc?
 
Your accountant has given bad advice by advising that the company just be left to be struck off (involuntary strike off).

Wind things down in an orderly manner and engage with Revenue and go for voluntary strike off.

If you leave things to simply “wither on the vine”, you’re leaving yourself - and any future businesses you might become involved in - open to risk. For example, did you know that where a company is involuntarily struck off, any assets vest in the Minister for Finance.

I have seen companies get struck off and their replacement companies (“Phoenix” companies with the same directors and shareholders operating the same businesses) being pursued by Revenue and Sheriffs and having their assets seized because the predecessor company didn’t wind up matters in an orderly fashion eg the assets legally remained in the predecessor company and/or vested in the State).
 
PS There never has been a better time to engage with Revenue for scenarios such as this. Enforcement is currently suspended but this won’t last forever. Regularise things now and you’ll sleep better. File your returns, warehouse any debt if Revenue are amenable, and get on with your life.
 
Jayom75 said:
PS There never has been a better time to engage with Revenue for scenarios such as this. Enforcement is currently suspended but this won’t last forever. Regularise things now and you’ll sleep better. File your returns, warehouse any debt if Revenue are amenable, and get on with your life.
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Agree. This is such a recent issue and with the havoc from Covid it makes perfect sense to correct this with Revenue.
 
Thanks for the feedback- much appreciated. I would much rather engage with revenue and pay whatever VAT may be due (ideally if they would do some sort of instalment type arrangement). Last year was such a mess and exceeding the VAT threshold and still trading a year later was not what I thought could ever happen....the ironic thing was covid worked in the favour of the business and without it I couldn't have traded online only. All prsi etc has been fully paid- I can't see vat being more than 8-9k so it doesn't seem to make any sense to ignore it and hope the co is just struck off without any repurcusions
 
Cubaintime said:
Thanks for the feedback- much appreciated. I would much rather engage with revenue and pay whatever VAT may be due (ideally if they would do some sort of instalment type arrangement). Last year was such a mess and exceeding the VAT threshold and still trading a year later was not what I thought could ever happen....the ironic thing was covid worked in the favour of the business and without it I couldn't have traded online only. All prsi etc has been fully paid- I can't see vat being more than 8-9k so it doesn't seem to make any sense to ignore it and hope the co is just struck off without any repurcusions
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The questions I asked you are relevant here too, I wasn't just asking you about them for the craic...
 
Debtors- none.
Creditors- likewise none except revenue as outlined above due to the VAT issue (all prsi etc fully paid).
All suppliers continued to supply and in most cases just meant a new 'application', paperwork etc. I almost always pay fro forma and request this even when credit terms are available.
There was transfer of some stock and as no end of year accounts etc have been filed yet I am not sure what way the accountant is handling- I changed accountant a year ago as the one for old ltd co didn't provide any strategic advise and delegated my accounts to a junior. For instance- this issue is only arising now as despite chasing to 'wind' things up they (old accountancy co) had no staff to even look at my accounts till now (or they just put it to the back of the queue). I just got on with things in the meantime- short sighted I know but right now I am trying to resolve as best I can
 
Cubaintime said:
Debtors- none.
Creditors- likewise none except revenue as outlined above due to the VAT issue (all prsi etc fully paid).
All suppliers continued to supply and in most cases just meant a new 'application', paperwork etc. I almost always pay fro forma and request this even when credit terms are available.
There was transfer of some stock and as no end of year accounts etc have been filed yet I am not sure what way the accountant is handling- I changed accountant a year ago as the one for old ltd co didn't provide any strategic advise and delegated my accounts to a junior. For instance- this issue is only arising now as despite chasing to 'wind' things up they (old accountancy co) had no staff to even look at my accounts till now (or they just put it to the back of the queue). I just got on with things in the meantime- short sighted I know but right now I am trying to resolve as best I can
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Ok, now as I understand it you were selling primarily online, so how did that transition work? Did the new company set up a new website or just inherit the pre-existing one?

It looks as though there was a transfer of a going concern, from your Irish company to your new UK company. If the business had a goodwill value then this ought to have been recognised.
 
Cubaintime said:
Debtors- none.
Creditors- likewise none except revenue as outlined above due to the VAT issue (all prsi etc fully paid).
All suppliers continued to supply and in most cases just meant a new 'application', paperwork etc. I almost always pay fro forma and request this even when credit terms are available.
There was transfer of some stock and as no end of year accounts etc have been filed yet I am not sure what way the accountant is handling- I changed accountant a year ago as the one for old ltd co didn't provide any strategic advise and delegated my accounts to a junior. For instance- this issue is only arising now as despite chasing to 'wind' things up they (old accountancy co) had no staff to even look at my accounts till now (or they just put it to the back of the queue). I just got on with things in the meantime- short sighted I know but right now I am trying to resolve as best I can
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Accounts are are always delegated to a junior and your new accountant does not seem to appreciate the significance of moving assets out of company while leaving the revenue debt behind. Nor the consequences to you personally where an involuntary strike takes place while there is debt involved.
 
Jim2007- yes I understand this but my point moreso is when I ever had queries etc they were never escalated but ultimately I know the 'blame' and responsibility lies with me. The new accountant isn't yet aware of the issues with the old company as this only arose Friday. I've no intention of leaving revenue debt behind- this was suggested to me Friday and my reason for posting is I'm not comfortable doing do but wasn't sure if revenue would engage.

Torblednam- 2018 our revenue was 100% bricks and mortar, 2019 the website was new and approx 15% which is why I was sure I was closing up then as we couldn't have survived online only. With covid the website took off and has continued to do well (dipped with bricks and mortar reopening but sustainable) Looking back I should have ensured a quicker transfer but nothing strategic was happening at that time- I was dealing with redundancies, building being locked down with initially no access to stock etc. So at the time (16 or so months ago) nobody would have looked at the business as we were completely dependent on bricks and mortar- while the website has done well since covid previous to this it held little value. Of course some goodwill value should have applied so I'll mention this tomorrow also
 
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