I run a limited company and want to change to be a sole trader does anyone know what this process involves ?

Answer 1

There is no actual procedure to change a company into an unincorporated business. The company will cease trading. If it has any assets then these can be sold to you. You will start self-employment .

So, first the company. It ceases trading and any fixed assets are sold to you. Debts are collected and monies owed are paid. Strictly the company should be liquidated but I am assuming you will not wish to pay the fees associated with this.

If there is a balance in the company, send the Inspector of Taxes a letter as detailed in Extra Statutory Concession (ESC) C16. Once the Inspector agrees the balance of funds in the company can be withdrawn and this will be treated as a distribution in liquidation and therefore subject to capital gains tax instead of income tax.

Now complete and submit form 652 to Companies House. This costs £10. The Registrar will eventually remove the company from the register.

As soon as the company ceases trading you start as a sole trader. Don't forget to register this business within three months (using form CWF1)

I think these are the basics of the usual procedure. Check with your accountant as I have made a number of assumptions which may not apply in your case.

Answer 2

Go to your local Citizens Advice Bureau or a Solicitor/Accountant/Business Advisor who should be able to help you.