One of the many issues faced when closing a business relates to VAT. When a business is closed, HM Revenue & Customs (HMRC) will need to assess what your final tax bill should be.
Capital Gains Tax
If your business has assets and theses are sold then you may be liable to pay Capital Gains Tax. Likewise the sale of shares my also incur Capital Gains Tax.
If you are VAT registered HMRC will start the process of cancelling your VAT registration when you inform them of your intent to the close the business. You will be issued with a final VAT return which will take into account stocks or any remaining assets at the point of closure.
There are however, certain costs which are associated with the closure of a business that may be classified as allowable expenses, which can be offset against your final tax bill.
Examples of closing costs include:
- The cost of administration, postage and telephone charges that relate to notifying HMRC, Companies House, your business suppliers and customers.
- Costs associated with the engagement of professional services such as accountant’s solicitors or estate agents.
Your accountant will be able to give you more detail about what costs are allowable. It is always advisable to seek assistance with your tax liabilities in order to avoid costly mistakes. Finally it is important to remember that your individual circumstance will naturally influence the outcome.