US owner wants to shut my office
PM writes: For the past three years, I have been the sole employee of a UK branch of an American business. Now the parent wishes to close the unit because it can no longer support its losses. Is there a formal process we have to follow when closing the branch down?
Although the branch is closing down, the underlying entity — the overseas business — will continue to exist, writes Chris Lane, a partner at Kingston Smith LLP. Therefore, the closure is not like a formal liquidation of a business but, rather, like a controlled closure of one outlet.
The branch will need to complete form OS DS01 and send it to Companies House. This is the formal notification that the UK branch has closed, and the notice will be placed on the public record for anybody to see.
You will also have to deal with the other formalities, such as closing the branch’s Vat registration and payroll scheme. In addition, the UK branch will need to prepare its final accounts and send them to HM Revenue & Customs (HMRC), along with a corporation tax return, to agree its final tax position.
In terms of Vat, you will need to submit a form Vat 7, which can be found on the HMRC website, to cancel your registration. HMRC will then write to you, if it is happy with the facts supplied, confirming the cancellation. There may, of course, be some Vat to pay on the assets of the business if you decide to sell them as part of the closure.
Once all the debtors and creditors have been dealt with, you can close the branch’s bank account. Any money left over will belong to the American business.