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My son was advised by his accountant to close his limited company and start a partnership instead. He did this but he was not told that he needed to clear the company bank account - he left this open as he was expecting to receive several payments into the account from customers. He then found that the bank had closed the account and the funds (several thousand pounds) had been transferred to the government. He's now been told that he will have to go to court to recover the money. What should he do?

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    Hmmm.... Go to court to recover the money? Its probably a dormant account. Here in California dormant accounts are transferred to the State after 5 years of inactivity, and them the owner need to reclaim it (prove ownership) and the State will pay it out (if I remember right - with some interest). – littleadv Oct 23 '12 at 8:42
  • Did he advise his accountant of this consequent situation? What is the accountant's advice in the matter? – Chris W. Rea Oct 23 '12 at 14:19
  • I think this is a UK Business law thing. Though I do not have enough experience to give a good answer, as I understand it when a business goes out the money goes to the government and anyone who has a claim against that business must show proof that they are due that money... – user4127 Oct 23 '12 at 14:51
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    His accountant has just walked away. I did tell my son to see if the accountant has Professional Indemity insurance for I feel that the accountant should have brought the bank account problems to the attention of my son when he gave advice on closing the limited company. – Edmund Cox Oct 23 '12 at 16:08
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    Ordinarily closing a bank account doesn't result in funds going to the government. I suspect some other thing going on such as: company is in receivership; failed to tell the bank where to send the funds; funds are owed to the government, e.g. for taxes; someone else has made a legal claim that the company owes them money;inactive account. – DJClayworth Oct 23 '12 at 19:59
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Legally speaking, if you do close a limited company, the funds belong to the government ("bona vacantia"). There's some guidance on this at Companies House and there is indeed a substantial amount of administration work to get it undone.

Notable excerpts:

You should deal with any loose ends, such as closing the company’s bank account, the transfer of any domain names - before you apply. [...]

From the date of dissolution, any assets of a dissolved company will belong to the Crown. The company’s bank account will be frozen and any credit balance in the account will pass to the Crown. [...]

4. What happens to the assets of a dissolved company?

From the date of dissolution, any assets of a dissolved company will be 'bona vacantia'. Bona vacantia literally means “vacant goods” and is the technical name for property that passes to the Crown because it does not have a legal owner. The company’s bank account will be frozen and any credit balance in the account will be passed to the Crown. [...]

Chapter 3 - Restoration by Court Order

The registrar can only restore a company if he receives a court order, unless a company is administratively restored to the register (see chapter 4). Anyone who intends to make an application to the court to restore a company is advised to obtain independent legal advice. [...]

Chapter 4 - Administrative Restoration

1. What is Administrative Restoration?

Under certain conditions, where a company was dissolved because it appeared to be no longer carrying on business or in operation, a former director or member may apply to the registrar to have the company restored. [...]

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    +1 good find. I added some relevant excerpts .. we like those. – Chris W. Rea Oct 26 '12 at 13:31
  • Thanks. I did want to add a summary of the conclusions but it actually seems quite complex and I was afraid of getting it wrong. Verbatim excerpts are a good compromise. – Ganesh Sittampalam Oct 26 '12 at 16:40
  • BTW I ripped off the answer from my own answer to a previous question: money.stackexchange.com/a/8753/366 - I did think about voting to close as a duplicate instead, but the scenarios are quite different because in this instance thousands are involved whereas in the other question it was only hundreds and therefore not worth actually going through the process of getting it back. – Ganesh Sittampalam Oct 26 '12 at 16:44

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