Corporation tax and annual accounts for a closed UK company that lost money Consider the following hypothetical scenario. Person A starts a limited liability company B in the UK, registered in England and Wales, through Companies House. Company B has expenses and some income, but overall makes a loss. Person A decides to close the company before the first anniversary and the company is struck off the register. Because the company is closed, person A has difficulty filing annual accounts with Companies House and a corporation tax return with HMRC. I was unable to find guidance on UK government websites about this situation. Does company B need to file corporation tax with HMRC and annual accounts with Companies House? Does person A need to declare or pay income tax on the company's trading loss?
According to dot-gov's Strike off your limited company from the Companies Register page... Does company B need to file corporation tax with HMRC? Yes You must send final statutory accounts and a Company Tax Return to HMRC. ... and annual accounts with Companies House? No You don’t have to file final accounts with Companies House. Does person A need to declare or pay income tax on the company's trading loss? Yes If you’ve made a loss in your final year of trading, you might be able to offset the tax against profits from previous years - this is known as ‘terminal loss relief’. You can claim this on your final tax return. However, you're better off checking with HMRC to be sure.
Less than zero dollars. An undertaking like this is usually categorized as either a hobby or a business. The official guidance is in IRS Publication 535, but a determinination takes into account lots of different factors, such as: how much time and effort goes into the undertaking; whether the taxpayer relies on the income for basic expenses; whether the taxpayer adapts his/her methods to increase profitability; whether the taxpayer has made profits this year or in years past; whether the taxpayer can reasonably expect to turn a profit in the near future. Even if you're losing money, the IRS may still say it's a business if all the signs suggest that that's what it is.
The usual method is that every country charges you income tax for income that you make while your body is in the country. Big exception is the USA which wants a chunk of every income, and some countries like Germany calculate your tax rate based on world wide income, but charge that tax rate on your income in Germany. &quot;Double taxation agreements&quot; usually have the purpose that if two countries think you should pay tax on the same money, then somehow you only pay once. If you were a US citizen, then being tax-free in Indonesia wouldn't help you at all, because the USA would want full US tax minus zero Indonesian tax. In the UK, you need to check what money you have to pay tax on as a UK citizen, especially in the first and last year when you are still in the UK. For the use of a bank account in which country, ask a lawyer. Especially as making a stupid mistake could be very costly. It may be easier to set up a company in Indonesia and your company pays the company, because it is very unlikely that your UK company wants to learn about Indonesian tax law and risk getting it wrong.
In the UK: "Under section 277 of the Companies Act 1985, where a shareholder knows or has reasonable grounds for believing that a dividend was improperly paid, he is liable to repay it to the company." So if the company declared a dividend based on incorrect knowledge of their financial position, and they find out their true financial position that wouldn't allow a dividend payment, not only can (and must) they revoke or cancel the dividend payment, they can even force shareholders to repay the dividend. But that only applies if the declared dividend is more than the company is legally allowed to pay. The company might say "we have enough cash in the bank and no debt, we could pay a £10.00 dividend without breaking the law, but we only pay £0.50". If they discover their numbers are wrong, and they could only pay £8.00 legally, then they can't change their declared dividend from £0.50 to £0.40. The declared dividend is legally binding, except when the dividend amount is too high to be legally allowed.
In general, a liquid account, denominated in monetary units (dollars, pounds, euros, etc) from which the owner has the right to make a withdrawal at any time is treated legally much the same as cash. This includes a bank account and a brokerage 'cash&quot; account. It will not include a mutual fund account denominated in shares of stock, nor a debt which is not collectable at will. When the proceeds of a transaction are depositd into such an account, I believe that the profit (if any)m has been &quot;realized&quot; and that a taxable event has occurred. Under 26 U.S.C. § 1001 a gain or loss is realized on the sale or other disposition, or exchange of property. Nothing is ssid about 'cash&quot; or accounts with a signature authority. Under 26 CFR 1.1001-1: ... the gain or loss realized from the conversion of property into cash, or from the exchange of property for other property differing materially either in kind or in extent, is treated as income or as loss sustained. in Cottage Savings Ass'n v. Comm. of Internal Revenue, 499 U.S. 554, 559 (1991) The US Supreme Court wrote: Rather than assessing tax liability on the basis of annual fluctuations in the value of a taxpayer's property, the Internal Revenue Code defers the tax consequences of a gain or loss in property value until the taxpayer &quot;realizes&quot; the gain or loss. The realization requirement is implicit in § 1001(a) of the Code, 26 U. S. C. § 1001(a), which defines &quot;[t]he gain [or loss] from the sale or other disposition of property&quot; as the difference between &quot;the amount realized&quot; from the sale or disposition of the property and its &quot;adjusted basis.&quot; As this Court has recognized, the concept of realization is &quot;founded on administrative convenience.&quot; Helvering v. Horst, 311 U. S. 112, 116 (1940). ... Section 1001(a)'s language provides a straightforward test for realization: to realize a gain or loss in the value of property, the taxpayer must engage in a &quot;sale or other disposition of [the] property.&quot; The parties agree that the exchange of participation interests in this case cannot be characterized as a &quot;sale&quot; under § 1001(a); the issue before us is whether the transaction constitutes a &quot;disposition of property.&quot; ... Neither the language nor the history of the Code indicates whether and to what extent property exchanged must differ to count as a &quot;disposition of property&quot; under § 1001(a). Nonetheless, we readily agree with the Commissioner that an exchange of property gives rise to a realization event under § 1001(a) only if the properties exchanged are &quot;materially different.&quot;... ... We start with the classic treatment of realization in Eisner v. Macomber, supra. In Macomber, a taxpayer who owned 2,200 shares of stock in a company received another 1,100 shares from the company as part of a *pro rata- stock dividend meant to reflect the company's growth in value. At issue was whether the stock dividend constituted taxable income. We held that it did not, because no gain was realized. ... In Phellis and Marr, we held that the transactions were realization events. We reasoned that because a company incorporated in one State has &quot;different rights and powers&quot; from one incorporated in a different State, the taxpayers inPhellis and Marr acquired through the transactions property that was &quot;materially different&quot; from what they previously had. United States v. Phellis, 257 U. S., at 169-173; ... Taken together, Phellis, Marr, and Weiss stand for the principle that properties are &quot;different&quot; in the sense that is &quot;material&quot; to the Internal Revenue Code so long as their respective possessors enjoy legal entitlements that are different in kind or extent. Thus, separate groups of stock are not materially different if they confer &quot;the same proportional interest of the same character in the same corporation.&quot; Marr v. United States, 268 U. S., at 540. However, they are materially different if they are issued by different corporations, id., at 541; United States v. Phellis, supra, at 173, or if they confer &quot;differen[t] rights and powers&quot; in the same corporation, Marr v. United States, supra, at 541. No more demanding a standard than this is necessary in order to satisfy the administrative purposes underlying the realization requirement in § 1001(a). See Helvering v. Horst, 311 U. S., at 116. For, as long as the property entitlements are not identical, their exchange will allow both the Commissioner and the transacting taxpayer easily to fix the appreciated or depreciated values of the property relative to their tax bases Thus any exchange of property for other property which is in some significant sense different, such as interests in different mortgages of similar market value, or any sale of property causes a gain or loss to be realized.It does not matter in what sort of account the proceeds are held, or even whether the proceeds are in cash as opposed to some other sort of property. The beneficial owner realizes a gain or loss, even if s/he is not the legal owner.
The IRS summarizes the rule as follows: Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and is not deductible. Refer to chapter 4 of Publication 535, Business Expenses, for information on deducting interest and the allocation rules. Business Use of Your Home If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Refer to Home Office Deduction and Publication 587, Business Use of Your Home, for more information. Business Use of Your Car If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses. For a list of current and prior year mileage rates see the Standard Mileage Rates. In practice, a mixed use expense will often be disallowed unless you can document in some way the percentage of use that was business related (e.g. with some kind of log). For inexpensive items, it is often cheaper and easier from a bookkeeping perspective to have dedicated business and dedicated personal items, even if it means that there is some duplication of purchases. Also, if property is owned by the LLC, but used for personal purposes by the owner of the LLC, this will very likely destroy the limited liability protection associated with the LLC. Comingling of business and personal property is a leading reason to pierce the company veil.
united-states Meet the word &quot;clawback&quot;. The general rule is that anything you do simply for asset protection can be undone by the government or courts. See the excellent book by Adkisson and Riser titled Asset Protection. First, the creditor is going to ask about all your assets including transfers. You have to answer truthfully, or else you open a whole other can of worms. The creditor and court will look at the character of these transactions. Suppose you sell a Ferrari worth $200,000 appraised value, to your brother for $155,000. However, it was an open eBay auction. Plaintiffs review it, hoping to find it was a &quot;vest pocket&quot; sale rigged to be unappealing to anyone but family. Wrong: it was a competent and earnest listing, which did attract 12 stranger bidders, and 3 bidders took up your offer to let them inspect the car. And according to Ferrari brokers that price was realistic given the soft market. Your brother simply outbid them, for nostalgia reasons. You did get the money and did use it to settle with creditors. That sale will be considered legitimate, because there's extensive provenance held in reliable third party hands (eBay). You sell the Ferrari for $100 to your brother. The court will presume that you intend to buy the car back for $100 after your legal troubles have cleared. This sale will be declared invalid, the Ferrari clawed back, and the creditor will be able to target that asset. The same thing can happen if you are insolvent, expect to enter bankruptcy, and pay a creditor &quot;out of turn&quot;. E.G. you settle your debt with the country club (so you can keep attending) before you pay your tax bill. The creditors, IRS or court can &quot;claw back&quot; that payment. That happened to my family's business once. Meet the word &quot;Penalties&quot;. OK, so what does a dumb crook do? They lie about their assets. They testify &quot;I crashed the Ferrari on the property, it was a basket case. I parted it out and chopped up the rest, threw it in the weekly trash week by week&quot;. And they can produce no documentation of any part sales. Meanwhile, plaintiff had already pulled DMV records and found it's currently registered... to the brother, with a DMV sale price of $100. They sent over a detective, who has pictures of it sitting in the brother's garage. And plaintiff gleefully maneuvered the dumb crook into a lie under oath. And now they face judicial punishment - including harsh fines, and jail for contempt of court or refusal to disclose. This bypasses the Fourth Amendment, so there is no trial for proof of guilt. But it's a government agency, not a private party All the moreso, then. Government has the right to bypass some of the rules for private parties - such as being able to do asset search, subpoena, or attach assets without filing a lawsuit. The IRS is probably the most experienced at pursuing asset hiders. They have &quot;their own&quot; Tax Court which does exclusively tax cases.
Do I have to pay taxes if I register the domain but the website income belongs to someone else? No. The person or company who runs, and/or profits from, the business is the entity under obligation to pay all the applicable taxes: Value Added Tax, income tax, corporate tax, and so forth. Unless you charge a significant amount therefor (see the comments), the mere registration of just one domain is unlikely to trigger tax obligations.