What is the process of closing a limited company?
Dissolving a limited company is a fairly straightforward process, but there are specific conditions and requirements that need careful consideration. The dissolution process is a cost-effective way to close down your business, and the company is removed from the register at Companies House. There must be no insolvency procedures in existence or pending, and once a closure date has been decided upon, you need to work through a checklist of actions prior to making the application. During the three months leading up to dissolution, it is crucial that the company does not:
- Change its name
- Dispose of assets or stock
- Carry on trading
HMRC and payroll obligations
- Notify HMRC of your intentions to close the company
- Cancel any VAT registration
- Finalise your payroll, including sending P45s to all employees and directors
- Ask HMRC to close down the payroll scheme, after ensuring that all PAYE and NIC liabilities have been met
- Complete and submit a P35 end-of-year payroll summary If your staff are being made redundant, you will need to consider their redundancy payments and any other associated liabilities such as wages or holiday pay.
Statutory filing and accounts
Once all transactions have been processed you can complete and file the company accounts and tax return, making sure to tell HMRC they are the final accounts before dissolution. You will receive notification of the company’s Corporation Tax liability, which should be paid quickly, as dissolution cannot go ahead while there are remaining liabilities.
Company bank accounts and other assets
Any remaining assets should be divided between shareholders prior to the date for dissolution. Once the company no longer exists, any unallocated assets or cash in the bank will go to the Crown as they are deemed to have no legal owner.
Making the application for strike-off
When all of the above has been finalised, a majority of the directors will need to sign the application form DS01, which should be sent to the relevant Companies House address along with a £10 fee. Once the form has been accepted by Companies House, a notice of dissolution will be placed in the local Gazette, and also on the company’s public record. There now remains one of the most important parts of the company closure process – informing all interested parties that the company is being dissolved.
Who needs to be notified?
Interested parties include members of staff, creditors, pension fund trustees, HMRC, shareholders and any directors who did not sign the application. Copies of the application form are used as notification, and must be sent within seven days. These requirements also apply to anyone who becomes an ‘interested party’ after the application is made. Creditors are an important group in this part of the closure process, as dissolution cannot go ahead without their agreement. Any creditor who does not receive notification, and who is owed money, has the right to apply for the company to be restored at a later date. The public notice placed in the Gazette also allows for any objections to be made from third parties. Once the business has actually been dissolved, another notice goes in the Gazette stating that the company no longer exists.
The timescale from start to finish
It takes a minimum of three months from the time of application to dissolution - this is the time in which creditors can object. Depending on the structure and complexity of your business, however, the process can take a great deal longer. You also need to factor in the initial three-month period leading up to the application, during which time you wind down the company’s affairs and make preparations for dissolution. This is a procedure that cannot be hurried – it requires careful planning, and even more care during execution to ensure that no mistakes are made.
If an objection is made
If someone objects to your application for strike-off, they must write to the Registrar of Companies explaining their reasons, and providing evidence to support the objection. They might believe that your company still owes them money, or perhaps that a false declaration has been made. Begbies Traynor offers professional guidance to ensure that requirements are met prior to applying for company dissolution, and to assist should any objections be forthcoming. We have 37 offices around the country, and are able to offer same-day consultations.