There are many reasons why you might decide it’s time to close down your limited company. Depending on the circumstances it can either be a simple process or more complex. 

If you decide to close your limited company you must apply to Companies House. This allows you to wind up its operations and have it struck from the register. 

The process you use depends on the financial position of your business. If your business is able to pay its bills it’s solvent and this process is simpler. If it’s unable to pay its bills and is therefore insolvent, it’s more complicated. 

 

Directors of a solvent business can choose to have it voluntarily struck off. Alternatively, you can start a members’ voluntary liquidation. If your company is insolvent, the directors can propose a creditors’ voluntary liquidation. To do this at least three quarters of the voting shareholders (by value of their shares) must a agree and pass a winding-up resolution. Sometimes creditors or HMRC can force an insolvent company into compulsory liquidation. 

To strike your company off the register it must not have: 

• traded or carried on any business for three months 

• changed its name within the last three months 

• been subject to proposed or current legal proceedings 

• disposed of property or rights. 

 

You can download and complete a form which the majority of directors must sign. You can deliver it online or by post with a filing fee (£33 online or £44 by post). You must let certain people know you have submitted the form by sending them copies within seven days. They include: 

• creditors 

• employees 

• company shareholders 

• pension managers or trustees 

• other company directors 

• anyone else who becomes a ‘notifiable party’ within seven days of your application. 

 

If your application satisfies Companies House it will display the information on the public register and publish a notice to confirm your intention to close the company. Provided nobody objects within three months Companies House will confirm the company has been wound up. 

To do this you must make a Declaration of Solvency to confirm your business can pay its debts in full within 12 months. The directors then have five weeks to propose a special resolution for voluntary liquidation and then publish a notice within 14 days. A liquidator is appointed to take control of the business and oversee the winding-up process. Finally, a general meeting of creditors is called and reported to Companies House. Normally dissolving the company then takes place within three months. 

If your company can’t pay its bills you should call a general meeting of shareholders. They can pass a special resolution to start the winding-up process. 

 

The directors appoint a liquidator to take over the company who will call a creditors’ meeting and oversee the liquidation. They will send the resolution to Companies House which will advertise the intention to wind up the company. 

 

A summary of the company’s assets and liabilities must be presented at the creditors’ meeting. All assets are converted into cash and paid to creditors in order of priority. The liquidator will hold a final meeting and the company is normally struck off the register within three months. 

If you can’t reach an agreement with your creditors, they can apply to the courts for a winding-up petition. This puts your company into compulsory liquidation and the appointed liquidator sells any remaining assets. 

 

Is dissolving a company complicated? 

It depends on your business. Normally the whole process is complete within three months of advertising the winding-up notice but it can vary a lot. You must pay outstanding debts and wages whenever you can but there’s quite a lot of administration too. 

 

Striking off a solvent company is normally the simplest and cheapest option and usually only involves a small fee to Companies House. 

 

Liquidator’s fees can mount up and depend on how difficult it is to realise your assets and pay your creditors. You’ll also pay advertising fees. If your company doesn’t have enough assets to cover the costs the directors could become personally liable. 

People with an interest in your business can send written objections with supporting evidence to Companies House. 

If you’ve decided it’s time to close down your company you should pay its debts and close your business bank account. When this is done you should tell HMRC your company has ceased trading and is ‘inactive’ (dormant) for Corporation Tax. You must submit a Corporation Tax return and pay any outstanding tax for the accounting period. Then you can start the winding-up process. If you’re disposing of assets you might need to pay Capital Gains Tax (CGT). You might also have to make a final Corporation Tax return and pay another bill when the process is complete. You should include any personal gains from disposing of assets and shares in your self-assessment tax return. 

 

You must close your company payroll and make a final Full Payment Submission (FPS) as part of your final payroll. You must meet the deadlines for any outstanding PAYE tax and National Insurance payments by the given deadlines. 

 

If your company is registered for VAT, it should be de-registered and you should submit a final VAT return and pay your bill. 

 

Profectus Accounting provides full-service accounting and bookkeeping services. If you’re thinking of closing down your limited company and would like help with your financial information please get in touch.