How you close down your limited company will depend on whether it is insolvent or solvent. An insolvent company is unable to pay its debts as they fall due. A solvent company is financially healthy and can pay its debts on time.
There are different routes to close a company based on your company’s financial situation. All are designed to ensure the official winding-up and dissolution of your limited company.
To close a company which is insolvent you will likely need the assistance of a licensed Insolvency Practitioner as the process will need to be carried out in line with legal requirements. Closing an insolvent limited company may seem daunting, but with the help of an Insolvency Practitioner you are able to start a Creditors’ Voluntary Liquidation which provides a structured way of closing down an insolvent limited company.
Ignoring the problem of an insolvent company will not make the issue disappear, it can often make the situation much worse. As a director of an insolvent company, you have responsibilities which you must fulfil by law. Failure to adhere to these responsibilities can result in significant consequences.
Seeking the advice of a licensed Insolvency Practitioner you can have peace of mind that your company will be closed correctly and in line with regulations.
The Liquidation Centre offers free no-obligation financial health checks for limited companies like yours. Contact us today for more information.
If your company is solvent (it has more assets/funds than debts) there are two ways in which you can close it down.
The cheapest way to close down a solvent company is to apply for a dissolution/strike-off from Companies House, for a small fee. If your company has limited assets this can be a cost-effective way to close down your company.
There are several legal criteria that your company must meet to be able to apply, including that the company has not traded or changed its name in the last three months or is under the threat of insolvency action.
If your company has a larger amount of assets, it could be better to close it down through a Members’ Voluntary Liquidation.
An Insolvency Practitioner will need to be appointed to carry out the process of liquidating all company assets and distributing the net proceeds across all company shareholders fairly.
An MVL has the potential to save you £1000’s in the form of significant tax benefits available with the process. Eligible shareholders who receive dividends from a company in an MVL can potentially benefit from Business Asset Disposal Relief which would see them paying a fixed 10% on all qualifying gains from company assets
If you are the director and shareholder of a solvent company and wish to access this low-tax benefit, contact our in-house team of liquidation experts today.
Suppose you are not ready to take the final step to close down your solvent limited company permanently but are not in a position to trade at present. You could consider making the company dormant.
By making the company dormant, you can resume trading or close it down at a later date, when you have a clearer idea of your company plans.
This option is free. You will need to notify HMRC that your company is dormant for tax purposes and must file dormant company accounts and other notices as normal during the dormant period.