Can HMRC Pursue a Dissolved Company

Can HMRC pursue a dissolved company? Written by John A Waller Consultant. Reviewed May 27th,2024.

Yes.

HMRC can investigate and pursue dissolved companies if they owed HMRC tax when they were struck off the register at Companies House.

HMRC can pursue a dissolved company for up to six years from the date of dissolution, but if they suspect fraud or negligence by the directors, they can pursue it for up to 20 years. To do so requires the company reinstatement.

Are directors able to dissolve a limited liability company without fully satisfying its creditors and clearing matters with HMRC?

Can HMRC pursue directors personally?

Yes.

At this point, directors should therefore seek immediate help from HBG Advisory.

Can a Company with Tax Debts Dissolve Itself?

Companies with unaffordable tax debts need directors to approach the HMRC to either commence:

Dissolving a limited company owing HMRC money does not get rid of the debt and risks directors. Closing a company through a voluntary liquidation, including a Creditor’s Voluntary Liquidation with an Insolvency Practitioner appointed as liquidator, will legally deal with this issue, failing which the company faces a Compulsory Liquidation with the Official Receiver appointed.

The Companies Directors via creditors will choose a licensed insolvency practitioner to act once approved by the company’s shareholders. The company’s creditors will sell its assets, repay its creditors, and end the business. Any unsecured debts that the liquidator remains unable to pay remains written off. 

If a limited company remains insolvent and you wish to attempt to strike of a company and dissolve it. You therefore have a severe chance of having it stopped, reinstated, and held liable for its debts, and prosecution.

The creditors may still attack a dissolved company, along with the HMRC, through the courts, and reinstate the company at companies house. Therefore, resulting in potential ongoing issues for the former directors. 

Closing a Limited Company still owing a Bounce Back Loan?

As with HMRC and other creditors, attempting to close a limited company without paying the Bounce Back loan back may only be actioned by using Creditors Voluntary Liquidation or a Compulsory Liuquidation. For further detailed reading, please view bounce back loans guarantees and liquidation..

Seeking to dissolve the company however will be problematical, and if achieved, risks reinstatement at companies house by the lender.

Directors attempting such action, expose themselves to repaying the loan and any other outstanding creditors personally, and possibly director disqualification.

What is involved in a Company Dissolution?

The company dissolution process needs a company to remain;

  • a limited solvent company;
  • In the past three months, no trade whatsoever;
  • And has no insolvency procedure threatened?

Providing none of the above applies, the company may then have it struck off the registrar and cease for good. 

The dissolution process requires legally a copy of the strike-off application to all interested parties of the company, including outstanding creditors and HMRC. Then the registrar publishes a notice in the London Gazette advising of the proposed dissolution, affording all parties three months notice to file an objection if required. Then, if no complaints are filed, may the company be dissolved.

Therefore, hard to dissolve a company with tax arrears or other outstanding debt. HMRC monitors and stops limited companies wishing to commence a striking off until all outstanding liabilities are paid in full, especially those due to any department in the revenue. Should the company be unable to pay its debts? Then it requires a ‘voluntary liquidation’ to resolve matters. 

Can HMRC Proceed to reinstate a Dissolved Company?

Yes.

HMRC can action the company restored to the register at companies house,

If the companies owe Tax and failed to complete final tax return, HMRC can proceed with any action required upon the dissolved company to ensure recovery of outstanding Tax. 

HMRC may pursue unpaid tax in a dissolved company for up to six years. However, if fraud or negligence alleged, HMRC can still take action up to 20 years later.   

Can HMRC Pursue a Dissolved Company and Involve the Insolvency Service?

Yes.

HMRC may prompt an examination by the Insolvency Service of how you conducted yourself as a company director. 

Should the examination establish acts of:

  • Fraudulent trading;
  • wrongful trading or 
  • misfeasance whilst you were a director?

So personally exposing you to:

  • Personal liability for company debts:
  • A potential 15’year disqualification as a director:
  • Financial fines;
  • Up to a 7-year prison sentence.

Can HMRC Pursue a Dissolved Company when owed tax to them or other creditors? 

Suppose HMRC has reason to believe that the tax affairs of your dissolved company are not in order. Then they can apply to have the company restored by the courts before commencing their investigations into the restored company. 

When the restoration has happened, the HMRC will then begin looking into its affairs and why the directors had it dissolved? Therefore, a stressful period for the director resurfaces along with costs. 

Perhaps the HMRC may uncover many concerns, leading to wrongful trading allegations, exposing the company directors to a liability claim against them, not the company due to their actions. Usually, directorship bars are attached, and if serious, further criminal activity.

So always seek advice from an Insolvency Firm, including HBG Advisory beforehand.

For further reading, please view ‘can you close a limited company with debt?‘.

Do HMRC request Tax Repayments from a Company Director?

Not usually.

However, limited liability protects directors as to the company, and its finances remain separate legal entities and so distinct from your circumstances. So, a dissolved company and its debts are part of the limited company, not you as an individual. 

Note though, HMRC investigations may highlight areas of concern, including failing to pay tax due. If fraud suspected and proven, HMRC may go after the directors for those payments, so remain ‘warned’! 

Applicable to:

  • VAT and PAYE;
  • Corporation Tax;
  • National Insurance. 

A substantial liability will have accrued interest, and any penalties backdated to the date directors struck the company off the registrar at the company’s house.

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