Closing a Limited Company

Posted 28/06/2019

A director may decide to close the limited company for various reasons ranging from taking on a new employment to retirement. Before closure, a final set of accounts will be required from the last accounting date to the last day of trading to calculate the Corporation Tax due to HMRC. If no trading occurred between the last set of accounts and the cessation date, then none will be necessary. The company must pay any bills that it can afford before and must not have been trading for the last 3 months, for this voluntary strike-off to be started. If the company has traded recently then the company would need to hire an insolvency team to liquidate the company.

If the debt that a company owes cannot be paid, then it must enter a liquidation process, or it may be forced into compulsory liquidation if the company does not pay its creditors. This process can be avoided if the company applies for a company voluntary arrangement. When you appoint a liquidator, they take control of the company and the director will be unable to act for the company. Any information the liquidator requests must be given; a prosecutor can have you banned from being a director for up to 15 years and/or prosecuted if you do not behave appropriately. There must be a director of the company at the time of closure. Companies House will strike off a company if there isn’t a director but if you have a sizable amount of assets in the company then a strike off will make it difficult for the shareholders to manage these assets. To strike off a company once all assets have been dealt with, a DS01 form must be signed by most of the directors and sent to Companies House along with a cheque for £10. HMRC will also require notification, and any PAYE or VAT accounts should have their last reports sent to HMRC and closed, and any tax paid for during this time.

Once the company has been struck off, the status on Companies House will read as ‘dissolved’ along with an official date. This company cannot be re-opened. The strike off process can take a couple of months before the company is fully dissolved, depending on how fast the liquidation process is handled and if all creditors are paid or settled in a timely manner. Though the company may be struck off, the records of invoices and expenses should be kept for up to 7 years after the strike off date.The company does not have to close if the director wants to start trading under the company again. The company itself can be put into dormancy which will keep the company name registered with Companies House. Confirmation statements and dormant annual accounts will still be required to be submitted annually to keep the dormant company active for later use. There is no time limit to how long a company can be dormant for.

Tags: Business Closure, Companies House, Limited Company