How do I close my limited company?

Are you wondering how to close your limited company in the UK? Whether it's closing down a limited company, closing your business, or retiring to a sole trader status, we've got you covered. Tax issues or transitioning to a full-time job may also influence your decision. Rest assured, we'll guide you on the journey.

How to close a limited company

Evaluating your company's loans, assets, and liabilities is essential. If solvent, consider Members' Voluntary Liquidation (MVL) for net assets over £25,000 or Company Strike-Off if below. In case of insolvency, Liquidation is an option.

Trust us to handle all the details, making the process hassle-free. With expert support, you can confidently close your limited company and embrace new opportunities. Let's make this transition a positive and empowering experience together.

Liquidation can be categorised into two types: Voluntary and Compulsory.

Voluntary

Effortlessly close your UK limited company through Voluntary Liquidation. Appoint a liquidator, vetted by creditors, for a smooth process. Our expert team ensures seamless closure, providing professional guidance. Embrace new opportunities confidently. Let's navigate this journey together. Closing a LTD company made simple.

Compulsory

For closing a UK limited company, Compulsory Liquidation is an option when faced with a winding-up petition. Once the court issues a Winding-up order, the Insolvency Service or Official Receiver acts as the liquidator. Trust this process to close your LTD company efficiently and navigate company closure in the UK.

The legal process of closing a company: How does a limited company close down

When closing your limited company with HMRC debts, the regulations vary based on its financial status – solvent or insolvent. For insolvent companies unable to settle liabilities, consult an insolvency practitioner who may recommend a Creditors Voluntary Liquidation. Solvent companies with sufficient funds to cover liabilities can opt for a tax-efficient closure through Members' Voluntary Liquidation. Alternatively, if the company hasn't traded or sold stock in the last 3 months, a cost-effective method is striking-off or dissolution. Informing Companies House of your decision removes the company from the official register.

Trust the experts to guide you through the process, ensuring a seamless closure and compliance with HMRC requirements. Safeguard your interests and embark on a new chapter confidently. Close your limited company with clarity and ease.

The legal process of closing a company How does a limited company close down

Closing a Limited Company: What are the costs involved?

For a dormant company, opt for a cost-effective strike-off using Companies House's DS01 form, costing £10, if there are no debts. Closing a ltd company with VAT debt or other complexities may demand a Members' Voluntary Liquidation (MVL) or Creditors' Voluntary Liquidation (CVL) with fees ranging from £1,500 to £6,000, depending on the process's intricacy. Closing a limited company, whether due to VAT debt, being dormant, or with HMRC involvement, requires careful consideration and the right approach.

Closing a Limited Company: What are the costs involved

Informing HMRC of a closing company

Closing a dormant company while complying with HMRC regulations requires a systematic approach. Start by organising all business accounts, including previous year records, up to the final trading day. Once everything is in order, submit the documents to HMRC along with a formal request to close the corporation tax account. Notify HMRC about ending your employment status with the limited company and ensure to submit the P35 Employers Annual Return form while checking the completeness of your PAYE and National Insurance contributions. Additionally, get in touch with HMRC to deregister for VAT and promptly fill all necessary tax returns.

Informing HMRC of a closing company

Responsibilities when closing a limited company

While limited company formation may seem relatively straightforward, striking it off becomes a more intricate process when you take into account all the additional steps involved.

Deregistering for VAT

To close your limited company with VAT debt to HMRC, follow these essential steps. Complete and submit VAT form 7 to HMRC when you cease trading to deregister your company from VAT inclusion. Wait for HMRC to confirm receipt and provide a deregistration date before halting VAT accounting. Additionally, remember to submit a final VAT return, accounting for any remaining stock or business equipment.

Corporation Tax

To halt Corporation Tax reminders, notify HMRC of your company's discontinued trading and file a tax return online to declare it dormant. Even if HMRC hasn't requested a tax return previously, inform them via phone or post about the company's dormant status. By taking these steps, you can avoid unnecessary reminders and ensure a smooth process in closing a dormant company.

Responsibilities when closing a limited company

PAYE scheme

When a PAYE scheme becomes non-operational, it must be closed promptly when closing a company in the UK, including a LTD company. Contact HMRC and submit a final payroll return to initiate the closure process. HMRC provides detailed instructions on how to complete this procedure efficiently.

Capital Gains Responsibilities

If you have the question on how to close a company in the UK, including closing a LTD company, handle equipment purchased using company funds. Decide to sell the equipment or transfer ownership to yourself. Account for any capital gain and include it in your self-assessment tax return .

How to close a limited company if it’s solvent

convening a meeting with shareholders.
There are a few options to pick from if you're closing a solvent limited business.

Creditors’ Voluntary Liquidation (CVL)

Voluntary liquidation, a key method for closing a limited company with VAT debt or other financial difficulties, requires applying to Companies House. This process is vital for winding up businesses facing liabilities surpassing their assets. A company director initiates Creditor’s Voluntary Liquidation (CVL) by convening a meeting with shareholders. A 'winding-up resolution' must secure 75% shareholder agreement, followed by notifying Companies House and publishing the resolution in the Gazette within 2 weeks. Appointing an authorised liquidator is essential for a smooth and compliant closure. Voluntary liquidation offers a viable solution for closing limited companies with HMRC involvement.

How to close a limited company if it’s solvent

Members Voluntary Liquidation

The Members' Voluntary Liquidation (MVL) process is highly regarded by directors as a tax-efficient way of closing a limited company and as well as closing a limited company with VAT debt. Shareholders can gain capital from the remaining profits instead of dividends, making MVL a favourable option. With MVL, all company assets, even for a dormant company, are subject to Capital Gains Tax, not Income Tax, resulting in more money for company owners.

To complete the process, shareholders should pass a resolution for voluntary winding up, ensuring compliance with HMRC requirements. After 15 days, Companies House must be informed, and a Declaration of Solvency, signed by the majority of the company's directors, should appear in the Gazette within 14 days.

While an MVL closure fee starts from £2,250, its profitability depends on the company's retained profits, making it a profitable option for directors and shareholders. To make informed decisions about this method, consult with an accountant who can provide the right advice for closing a limited company efficiently

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Closure/Informal strike-off

To initiate the closure process of a company in the UK, including closing a ltd company with debts to HMRC, follow these steps. As a company director, complete and submit a DS01 form to Companies House to strike off the company. Alongside the form, enclose a £10 cheque from a different account and provide essential company details, including name, registration number, and directors' names and signatures. Shareholders, employees, and creditors should receive a copy of the submission within a week.

Once Companies House receives your submission, they will publish a notice in the Gazette to allow third parties to raise objections. If no objections are raised, Companies House will confirm the closure of your limited company after three months, as recorded in the Gazette.

To protect assets and profits, make sure to transfer them from the company to your possession before the strike-off. After the company is struck off, existing bank accounts become frozen, and any remaining assets fall under the Crown's possession.

Accounts preparation

Members Voluntary Liquidation

By using Members Voluntary Liquidation (MVL), you avoid being charged capital gains tax and income tax. To get the most out of your business, a licensed Insolvency Practitioner must act as a liquidator.

To start the process, 75% of shareholders must sign a declaration of solvency, which is a binding document showing that the company shall repay its debts with interest after liquidation within a given time. MVL is seen as more costly and time-consuming, as it can continue between 6 to 12 months, though a company can be dissolved 2 months after filing if there are no objections from third parties.

Is Members’ Voluntary Liquidation right for my company?

Opting for Members' Voluntary liquidation to close your company UK can be a tax-efficient and advantageous choice, particularly when your company can clear its debts and has surplus funds above £25,000. This method is highly favoured by directors looking for retirement, exploring new ventures, divesting assets, or addressing tax inefficiencies within the business. MVL ensures a seamless and controlled winding up process, allowing shareholders to make the most of the remaining funds in a tax-efficient manner.

Is your company solvent or insolvent?

Closing a limited company with VAT debt or any other financial situation calls for a careful consideration of its solvency status. A solvent company operates smoothly, meeting all obligations without issues. In contrast, an insolvent company faces challenges like unpaid debts and creditor pressure.

Whether you're closing a dormant company, a limited company with VAT debt, or any other scenario, comprehending your company's solvency is crucial.

How to close your company if it’s insolvent?

In cases where all shareholders and directors unanimously agree on the limited company's financial constraints, leading to an inability to clear debts, the optimal course of action is to commence the process of closing the company through Creditors Voluntary Liquidation (CVL). This approach becomes essential, especially when facing challenges such as closing a limited company with VAT debt or closing a dormant company.

During CVL, company assets are utilised to settle creditor claims, subject to the agreement of 75% of shareholders. A licensed Insolvency Practitioner plays a pivotal role in guiding this procedure, ensuring a seamless and well-organised closure. The timeframe for CVL hinges on the complexity of liabilities, available assets, and the company's size. By adhering to HMRC requirements and seeking professional advice, you can embark on a successful company closure journey, making way for new opportunities and a fresh start.

Is your company solvent or insolvent
Make your limited company dormant.jpg

Make your limited company dormant

If you decide to strike your business off from the official register, it will no longer be active, making it impossible to trade under that name again. However, you have the option to put the company on hold and make it dormant if you plan to resume trading under the same name in the future.

A dormant company doesn't require informing HMRC about an intention to close, but you'll still need to file certain tax returns with zero activity to indicate that you're not actively trading. Before making the company dormant, ensure you've paid your Corporation Tax in full. Additionally, submit your annual confirmation statement, dormancy statements, and annual accounts to HMRC.

Do I need an accountant for a dormant company?

Yes, when closing a limited company with VAT debt, handling its annual accounting statements becomes crucial. Employing a professional accountant can aid in preserving the dormant status, which is vital for closing a dormant company. Moreover, the accountant's guidance can be invaluable in understanding how to close a limited company dealing with VAT debt, while ensuring compliance with HMRC regulations.

Can I Close a Company and Start a New One?

When closing a company, directors must consider its financial status and liabilities. If the company is dormant or no longer trading, dissolution might be chosen. For cases with excessive debts, liquidation is an option to settle with creditors. If the business is no longer viable or has achieved its goals, dissolution may be suitable. Companies with no trading history can easily apply for striking off if there are no liabilities. However, those with liabilities despite no trading history can use striking off or liquidation for closure.

Can I Close a Company and Start a New One

How Long Does it Take to Close a Company?

When you initiate the process of closing a limited company, it typically takes approximately 3 months to receive a confirmation letter stating that your company has been struck off from the Companies House register.

However, the timeframe for liquidation, on the other hand, varies based on the number of company assets and the size of the business.

How Long Does it Take to Close a Company

Can HMRC pursue a dissolved company?

Yes, if you are closing a limited company with debts to HMRC and other creditors, it can be pursued, and it may receive an objection to its strike off before its full dissolution. In cases where a company has debts and is already dissolved, HMRC might apply to get the company back into the register so they can pursue the tax arrears owed. So, closing a limited company with debts to HMRC cannot be avoided by simply getting the business off the official register.

Why would a company be dissolved?

Company directors can decide to dissolve a company if:

  • The business is no longer trading or is dormant.
  • There are excessive debts, and they want to liquidate to pay off the creditors.
  • The business is no longer viable, and the directors want to legally close it.
  • If the specific goal of opening the business has been met, then it can dissolve.
Can HMRC pursue a dissolved company

Closing a Limited company that has never traded?

Companies that were opened but were never involved in any trade can simply apply for striking off because they do not have current liabilities. If you decide to close a limited company that has never traded, there are different options available depending on its specific situation. In cases where the liabilities exist but the business has never traded, an application for striking off or liquidation can be used as a way of closing it.

Closing a Limited Company What are the costs involved

Can I liquidate my company myself?

No, you cannot liquidate your company by yourself. Engaging an Insolvency Practitioner is crucial for a successful liquidation process. This complex procedure demands a professional's expertise to assess and investigate directors' conduct thoroughly, identifying any wrongful actions. Having a licensed Insolvency Practitioner (IP) handle your liquidation is a legal requirement to ensure a proper and compliant closure.

Can I liquidate my company myself

How to close a limited company with companies house?

If the process of closing a limited company is by applying for a striking-off and Companies House has received the DS01 form, it will update its records and advertise a notice of the proposal. When no objections are made, the company will be dissolved within two months of the application.

However, if the closure procedure is insolvent or solvent liquidation, the Companies House will wait until they get a filing of the final account by an official liquidator before the process starts.

How to close a limited company

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