A Guide to Closing a UK Limited Company

Closing a limited company can be a straightforward process or a more complicated issue requiring expert advice and support, depending on the specifics of the organization.

In light of this, we have compiled all the pertinent details regarding the various approaches you can use to dissolve up a limited company, including prices, requirements, timelines, and much more.

How to Close a Limited Company

To have your limited company closed up and struck off the register, you must apply to Companies House. Whether or not the company is solvent—that is, able to pay its debts—will determine which procedure you employ.

The directors may request that it be voluntarily removed from the register from Companies House if the company is solvent. Another option is to begin a voluntary liquidation of members. Another option is to begin a voluntary liquidation of members.

In the event of insolvency, the directors may suggest a voluntary liquidation procedure for the creditors. By passing a winding-up resolution, this course of action will require the approval of the closure from at least 75% of the voting shareholders (by the value of their shares).

Note that an insolvent business may be compelled into liquidation under specific circumstances by HMRC or its creditors. This process is called forced liquidation.

Striking Off a Solvent Company

The easiest way to dissolve or close a limited company is to complete a ‘Striking-off’ application for Companies House. To be eligible, the company must satisfy all of the following requirements:

• Is not the subject of any proposed or ongoing legal proceedings;
• Has not made a disposal for value of property or rights;
• Has not traded or engaged in any sort of business within the last three months;
• Has not changed its name within the last three months

If these requirements are met by your company, you need to download and fill out Companies House Form DS01. A majority of the directors must sign the document, which must be submitted to Companies House online or by mail together with the filing fee.

Within 7 days of submitting the application, copies should be provided to all notifiable parties, including:

• Creditors
• Employees
• Company shareholders
• Pension managers or trustees
• Other directors of the company
• Any person who becomes a notifiable party within 7 days of the application being made

Companies House will post the information on the public register if it deems the application satisfactory. A “Notice” confirming your decision to close the company will also be published in the London, Edinburgh, or Belfast Gazettes, depending on the Companies House jurisdiction in which your company is registered.

Companies House will certify that the company has been closed up and stricken off the register by publishing a second notice in the Gazette if no objections are submitted within the allotted three months.

Members’ Voluntary Liquidation of a Solvent Company

Solvent companies that satisfy the requirements for the “striking off” application can utilize this method. Directors must certify that the firm can pay off what it owes in full within a year of the winding-up process beginning in order to dissolve a limited company through a members’ voluntary liquidation. The subsequent actions will be necessary:

• A Declaration of Solvency must be submitted by businesses with an England and Wales registration. Businesses with Scottish registrations should get Form 4.25 from the “Accountant in Bankruptcy.”
• The directors of the company should announce a special resolution to voluntarily dissolve the business within five weeks. Normally, a majority vote of at least 75% is needed to adopt the resolution. Within 14 days of the special resolution being approved, notice must be published in the Gazette.
• After the liquidation process is finished, the insolvency practitioner will call a general meeting of the creditors and members.
• A liquidator must be appointed to take control of the company and oversee the winding-up process.
• The liquidator has to complete and submit “Form LQ01” to Companies House within two weeks of their appointment as the liquidation.
• The final meeting will include a comprehensive progress report on the liquidation. At least 30 days before the meeting, the meeting should be announced in the Gazette.
• Within a week following the meeting, Companies House must receive the progress report and a Return of Final Meeting. Unless the court issues an order postponing the dissolution, the company will be dissolved after filing the progress report and Return of Final Meeting at Companies House, which should take about three months.

Creditors’ Voluntary Liquidation of an Insolvent Company

If a limited company is unable to repay its debts, you will have to close it through a creditors’ voluntary liquidation. A director should call a general meeting of shareholders to begin this procedure. To start the winding-up process, the shareholders must pass a specific resolution. So, the director or directors must:

• Appoint a liquidator to take charge of the company and oversee the liquidation
• Send the resolution to Companies House within 15 days of the meeting
• Advertise the resolution in the appropriate Gazette (i.e. London/Edinburgh/Belfast)

A creditors’ meeting must be held by the corporation within 14 days of the resolution being passed. This meeting must be announced in the Gazette and given to creditors with a minimum of seven days’ notice. A copy of the Statement of Affairs, which is an overview of the company’s assets and obligations, must be provided to the liquidator following the creditors’ meeting.

When all assets (if any) have been turned into cash and distributed to creditors in priority order, the liquidation process will have come to an end. Upon the liquidator’s final meeting, the company will be stricken from the register in about three months.

Compulsory Liquidation by Creditors or HMRC

Your company can file a winding-up petition with the court to have it closed if it is unable to pay its debts and you are unable to come to an arrangement with your creditors. It shall enter into liquidation, and the designated liquidator shall sell its assets, if any.

We strongly advise you to get professional assistance as soon as possible if you are facing insolvency-related difficulties.

How Long Does it Take to Dissolve a Company?

Dissolving a limited company usually takes at least three months from the time the winding-up notice is published in the Gazette, though this might vary greatly depending on how complicated the procedure is.

How Much Does it Cost to Close a Limited Company?

The closing of a business entails a number of administrative expenses in addition to paying off existing dues and salaries. The way the business is wound up will determine how much you must pay:

• Dissolving a solvent business— This is typically the least expensive course of action. When submitting the striking-off application, you must pay Companies House a £10 disbursement charge.
• Members’ Voluntary Liquidation: You must pay the liquidator’s fee, which can be as much as £1500 plus VAT. The intricacy of the liquidation procedure will determine the overall cost. For their services, many liquidators will provide a fixed quote. Additionally, you will be required to pay the Gazette a charge in order to announce your company’s dissolution.
• Creditors’ Voluntary Liquidation: This method of firm closure is typically the most costly. The quantity of work needed and the intricacy of the process determine the liquidator’s cost. Generally speaking, the price range is between £3000 and £7000. The directors may be held personally responsible for the fees if the company’s assets are insufficient to pay for them.
• Mandatory Disposition. This kind of closure is imposed by HMRC or creditors. The creditor bears the expense of filing the winding-up petition instead of the business; nonetheless, any assets and funds owned by the business will be seized by a liquidator and utilized to settle the debts owed to the creditors.

Liabilities like VAT or PAYE.

You shouldn’t be required to pay business taxes or file tax returns if the company has never received or spent any money, and if there haven’t been any capital gains from the sale or disposal of any business assets.

Closing a Limited Company Without Paying Tax

In order to make sure that no responsibilities have resulted from the closure of the business, we strongly advise getting in touch with HMRC to verify your company’s status. You will need to supply the unique taxpayer reference for your firm when contacting HMRC, so be sure to have it.

Reopening a Dissolved Company

Certain dissolved companies may be administratively restored or reopened by requesting a court order. We strongly advise obtaining independent legal advice if you want to reestablish a dissolved limited corporation through a court order.

If the company was involuntarily struck off, for example by the Registrar for failing to file an annual confirmation statement or annual accounts, you can petition to Companies House for a restoration. However, in the event that the company is voluntarily shut down, administrative restoration is not possible.

Form your company with Incorpuk today

At Incorpuk, we will help you file accurate information when you register your company through us. We will help you with incorporation articles, a registered office address, and all you may need to register your company in the UK. Contact our team if you seek any information; we will gladly assist.

Final Thoughts

It should be noted that dissolving a UK-limited company is a more complicated process than one might anticipate. There are several actions that need to be carried out and in order to stay out of legal trouble, it is crucial to follow the right procedures. The tax implications of liquidating a business should also be considered, as there can be unpaid taxes that must be settled. To ensure that everything is done correctly, it is advisable to seek expert guidance from our experts at Incorpuk or a professional lawyer if you are considering dissolving your business.