Form new company or use exising?

[r200mgr]

Hi guys,

I could do with some advice on forming a new company if possible;

Background - I have a LTD company that I formed in May 2020, I would estimate the business has lost around £5k and the first accounts are due February 2022. I am not looking to continue with this business interest.

Current situation - I am looking to start a new business as a Limited Company, would I be best off starting with a newly formed company or is it worth changing the name and SIC code of my previously formed company to use?

Thanks in advance!

[Al Gorithum]

If you retain the existing co, you could carry the loss forward to reduce tax on the new activities.

[Countdown]

I assume you have losses that you can carry forward and offset against future profits. if so why not continue your existing Company?

Having said that I'm assuming the losses are yours and not people you owe money to (ie you don't have £5k net creditors sat on the balance sheet). If that's the case then declaring insolvency would save you the £5k but it's not going to do your credit history any good

[r200mgr]

Countdown said:

I assume you have losses that you can carry forward and offset against future profits. if so why not continue your existing Company?

Having said that I'm assuming the losses are yours and not people you owe money to (ie you don't have £5k net creditors sat on the balance sheet). If that's the case then declaring insolvency would save you the £5k but it's not going to do your credit history any good

I have no debtors or creditors, I have simply lost a portion of the money I put into the business.

I presume I would be able to carry these losses forward, my concerns would be;

1. Whether it would be simpler and easier to start fresh
2. It would mean I would have a set of accounts due sooner, or would I need to do a set of accounts in order to liquidate the previous company?

[Countdown]

r200mgr said:

I have no debtors or creditors, I have simply lost a portion of the money I put into the business.

I presume I would be able to carry these losses forward, my concerns would be;

1. Whether it would be simpler and easier to start fresh
2. It would mean I would have a set of accounts due sooner, or would I need to do a set of accounts in order to liquidate the previous company?

1. A lot simpler to continue the current business than to go through the process of winding the old company up and creating a new one.
2. You can apply to lengthen your accounting period.


Tbh your Accountant should be able to a dvise you of the best approach.

[Eric Mc]

Al Gorithum said:

If you retain the existing co, you could carry the loss forward to reduce tax on the new activities.

No - not likely to pass muster with HMRC. The loss has to be carried forward against profits generated from the same trade. A new business venture would not qualify as the "same trade" so the loss would not be offsetable.

UNLESS you can demomstrate that the new business activity is a continuation of the old one.

[Al Gorithum]

Eric Mc said:

No - not likely to pass muster with HMRC. The loss has to be carried forward against profits generated from the same trade. A new business venture would not qualify as the "same trade" so the loss would not be offsetable.

UNLESS you can demomstrate that the new business activity is a continuation of the old one.

Ah yes, thanks for the correction

[Andrianos232]

I think it's better to keep running the company that exists. And also don't forget about methods that can help you promote your company. Also, think about creating a website if you don't have one because it's hard to imagine a modern business without a website. And if you need a good way to promote, I would recommend you turn to seo freelancer where you can help with attracting new leads and also output your company website in the top search engines. All this should be good for your business, believe me.

Edited by Andrianos232 on Sunday 10th October 12:47

[DSLiverpool]

Eric Mc said:

No - not likely to pass muster with HMRC. The loss has to be carried forward against profits generated from the same trade. A new business venture would not qualify as the "same trade" so the loss would not be offsetable.

UNLESS you can demomstrate that the new business activity is a continuation of the old one.

What’s the likelihood of an existing Ltd morphing into a new Ltd (but keeping the same name) being challenged by hmrc ?

[Countdown]

DSLiverpool said:

What’s the likelihood of an existing Ltd morphing into a new Ltd (but keeping the same name) being challenged by hmrc ?

Negligible IMHO. Some of the SIC codes are so vague they could cover a multitude of different trades.

[Eric Mc]

DSLiverpool said:

What’s the likelihood of an existing Ltd morphing into a new Ltd (but keeping the same name) being challenged by hmrc ?

Using the probability of being caught breaking the rules is always an option. It is up to the OP to decide whether he wishes to risk breaking the tax rules or not.

[Marcosummers]

An experienced app development company will be able to customize an app for your business in accordance with its specific business requirements and unique design. The key to this custom software development process is having a dedicated and experienced team on your team. A team that has a strong understanding of app design will make it easier to create an app that will meet your business' needs and increase its conversion rate once it has been launched. These professionals can help you gain more profit in a very short period of time.

Edited by Marcosummers on Friday 22 October 13:41