Closing a limited company down

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I need to close my Limited Company

When you wish to close your limited company. Dependent on the financial position the company is in, decides the route to take.

Closing a limited Company

My limited company is Solvent

If your limited company is solvent, you may

  • Dissolve the company if all the debts are paid in full;
  • Use Members Voluntary Liquidation MVL if the company has assets or cash totalling £25,000 or more, and all debts are paid.

My limited company is insolvent

However, many directors wish to close their limited company due to the company being insolvent. Therefore, you may:

Closing a limited company with debts

Creditors Voluntary Liquidation (CVL)

Creditors of a limited company have the power to appoint liquidators to help the company realise its assets for cash to pay the company’s debts. 

A CVL is the most suitable option if substantial debt exists. Company directors must ensure they maximise the creditors’ best interests.

Read more on CVLs here. READ and contact John Waller on the number in the top right corner of this page. 

Compulsory Liquidation

A creditor owed £750 or more can apply to the court to wind up your company by filing a winding-up petition.

However, you must prove the company cannot pay you.

This will end the company, as a winding-up order will be made. The Official Receiver is then appointed to liquidate any company assets and investigate the director’s conduct before their appointment. 

Read more about compulsory liquidation. READ

How to close a limited company that never traded?

Strike off your limited company from the Companies Register.

You can close your limited company by striking it off (Struck Off) the Companies Register, but only if it has not:

  • traded in the past 3 months.
  • altered its name in the past 3 months

Additionally, the company:

Failure to meet these conditions means you will have to voluntarily liquidate your company instead.

How to close a limited company without paying tax?

It is illegal to deliberately avoid paying tax to HMRC.

However, you can close a solvent company to:

How to close a company without paying too much tax?

Directors may choose to dissolve their company mitigating tax by either:

  1. An informal or voluntary strike-off
  2. Using a Members’ voluntary liquidation (MVL).

Please contact John Waller for further details of closing your limited company legally in a tax efficient manner.

How much does it cost to close a limited company?

Liquidation fees vary depending on the limited company size and the work required to complete the process. Fees vary from around £3,000-£6,000 plus VAT with little or no assets.

However, the fee increases larger companies with complex issues and assets, such as bulky machinery, buildings, and so on,

Contact John Waller on the number detailed in the top right hand corner of this page.

How to pay the least tax when closing a company

If your solvent limited company has realisable assets of £25,000 or more, consider an MVL, as this will provide a lower tax on your money. Using proceeds from the company, therefore treated as capital distributions rather than income.

Shareholders may qualify for Business Asset Disposal Relief.

Closing a limited company and opening another

Directors who have liquidated a limited company without any issues or directors disqualification

remain able to incorporate a new limited company.

Closing a limited company with a directors loan

Once a limited company enters liquidation. The appointed liquidator is required to collect all debts and assets owned by the company.

An overdrawn directors loan is an asset of the company, and the liquidator will require to repay the loan.

However, should the director be owed money by the company, the amount will be considered an unsecured creditor if the director has no legal charges or debenture over the company.

Can i close a limited company?

No.

Only a licensed Insolvency Practitioner can act as a liquidator in the UK.

However, individuals can dissolve companies at companies house.

Contains public sector information licensed under the Open Government Licence v3.0.

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