In the world of business, there are times when a company may face dissolution, either voluntarily or due to external factors.
One common concern for directors and shareholders is whether HM Revenue and Customs (HMRC) can chase a dissolved company for any outstanding taxes or debts.
In this blog post, we will explore the circumstances under which HMRC can pursue a dissolved company, the process of reinstating a company to recover debts, and the importance of settling tax liabilities before dissolution.
Can HMRC Chase A Dissolved Company for Debt?
Yes, HM Revenue and Customs (HMRC) can chase a dissolved company for any unpaid taxes and debts.
This is because dissolving a company does not automatically absolve it from outstanding liabilities.
When a company is dissolved, it is struck off the Companies House register, but its outstanding debts remain.
HMRC has the power to apply to the court for a restoration order to reinstate the company and pursue any outstanding debts owed to them.
When Would HMRC Chase a Company That Has Been Dissolved?
HMRC would chase a dissolved company if they believe that the company still owes taxes or other outstanding debts.
Some reasons that may prompt HMRC to pursue a dissolved company include the following:
- Late or missing tax returns: If a company fails to submit its tax returns or does so after the deadline, HMRC may investigate and decide to pursue any unpaid taxes.
- Tax discrepancies: If HMRC discovers discrepancies in a company’s tax returns, such as underreported income or expenses, they may seek to recover the outstanding tax liabilities.
- Unpaid VAT, PAYE, or National Insurance contributions: If a company has failed to pay its VAT, PAYE, or National Insurance contributions, HMRC may take action to recover these debts.
NOTE – Click here if you want to learn how to close a limited company in the UK.
Will HMRC Reopen a Company That Has Been Dissolved?
HMRC can apply to the court to have a dissolved company restored to the Companies House register if they believe it is necessary to recover outstanding debts.
This is known as a restoration order.
If the court grants the order, the company is deemed to have continued in existence as if it had never been dissolved. Once the company is restored, HMRC can take legal action to recover the debts.
What is Limited Company Dissolution?
Limited company dissolution is the process of legally closing down a company by removing it from the Companies House register.
Dissolution can be voluntary, where the company’s directors decide to close the business, or compulsory, where the company is struck off by the registrar due to not filing documents or other issues.
During the dissolution process, a company’s assets are distributed, and any outstanding liabilities are settled.
However, if a dissolved company has outstanding debts, the company can be restored to the register, and its creditors, such as HMRC, can pursue the debts.
NOTE – You might also find this post useful: How To Dissolve a Limited Company On Companies House.
Where Can You Get Help with Dissolving Your Company?
If you’re considering closing your company or are facing potential dissolution, it’s essential to have expert advice and guidance on your side.
At Marchford, we are specialists in company closures, dedicated to helping businesses navigate the complexities of the dissolution process.
With our extensive experience and expertise, we can ensure that your company’s tax liabilities are settled and any potential issues with HMRC are addressed effectively.
Don’t leave your company’s closure to chance – contact Marchford today for a no-obligation consultation.
Our team of dedicated professionals will work closely with you to provide tailored solutions and support every step of the way, ensuring a smooth and stress-free company closure.
Final Notes On if HMRC Can Chase a Dissolved Company over Debts?
HMRC can chase a dissolved company for any outstanding taxes and debts.
If necessary, HMRC can apply for a restoration order to reinstate the company and pursue the debts.
As a company director, it is essential to ensure that all tax liabilities are settled before dissolving a company to avoid potential legal issues with HMRC.
If you are unsure about your company’s tax liabilities or the dissolution process, it is advisable to seek professional advice from our team here at Marchford.