Updated: 5th February 2020
Many times we are asked how to close a limited company and although the procedure is heavily regulated, there are some situations in which this may not be what the directors or business owner really wants to accomplish. Perhaps they see no way out of insolvency and, if asked, would rather continue trading if at all possible. However, if closing a business has been agreed by the majority of directors, we can offer sound advice to help you do so efficiently and within the law.
One decision which needs to be made is whether you intend to start up business again. Sometimes owners really want to file for what is called ‘dormant company accounts’ which is a lot more efficient than continually starting and dissolving limited companies. If you are sure that you will not want to trade again in the future, then closing a limited company means following steps in keeping with your situation. For example, a company must usually be solvent and should not have traded within the past three months.
Once the directors have voted to cease trading, closing down a limited company begins with preparing final trading accounts. These will be submitted to HMRC along with form CT600 (Company Tax Return) and the computation of corporate tax. At this time HMRC will be advised that these are the final accounts and further it is your intention to dissolve the company. Once they have issued a final assessment of your corporation taxes, it is imperative to pay them as soon as possible. If you are not paid in full, there is a possibility the HMRC will object to dissolution of your company.
Closing down a limited company entails a huge amount of paperwork and communications. Not only must you take the steps outlined above but you must also petition Companies House to strike off your company from the register. Since there are steps which must be taken before striking your company off the register, make sure everything is in order before making application to Companies House. If even the smallest detail isn’t seen to, the entire process could be delayed whilst that item is resolved.
Even HMRC recognises that closing Ltd. company rules and procedures can be a bit confusing so if it is within your power to authorise a financial adviser to act on your behalf, they suggest this may be beneficial. Since all your accounts need to be in order in order to finalise payments with HMRC, getting the help of a professional may reduce the amount of stress and work on the company's directors. It is only necessary to fill out form 64-8 which authorises an agent to work on your behalf.
Real Business Rescue works diligently to help turn businesses around, but if the directors choose to close down a company, our team is highly experienced in UK rules and regulations. When it’s time to close the doors, let us help you through the process which may be difficult to face. Whether you are looking to strike your business off the register or go dormant until you sort things out, we are there to assist you. Call us for a free consultation to get things moving forward.