How to Properly Close a Limited Company in the UK?

October 1, 2024

To close a limited company in the UK, it is essential to follow the proper procedures to ensure full compliance with all legal and tax obligations. This process involves several key steps that must be undertaken carefully to avoid any complications. Below is a comprehensive guide outlining these steps in detail.

1. Cease Trading and Settle Outstanding Debts

The first step is to stop trading and notify employees, suppliers, and customers about the company’s closure
Ensure all outstanding company debts are settled in full, including payments to creditors, employees, and taxes owed to HMRC.

2. Prepare and Submit Final Accounts and Tax Returns

Complete and file the company’s final statutory accounts with Companies House.
Submit the final corporation tax return and pay any remaining taxes owed to HMRC. If your company is VAT-registered, deregister for VAT and submit the final VAT return.

3. Distribute Remaining Assets to Shareholders

After debts and taxes are cleared, distribute any remaining assets (such as money or property) to the shareholders according to their shareholdings.

4. Select the Appropriate Closure Method

Voluntary Strike-Off (DS01 Form): If the company hasn’t traded in the last 3 months and has no outstanding liabilities, you can apply to have the company struck off the Companies House register using a DS01 form. This is the simplest option for solvent companies.
Members’ Voluntary Liquidation (MVL): For solvent companies that wish to close down, appoint a licensed insolvency practitioner to liquidate the company and distribute any assets to shareholders.
Creditors’ Voluntary Liquidation (CVL): If your company is insolvent and unable to pay its debts, appoint an insolvency practitioner to liquidate the company. In this process, the company’s assets will be sold to repay creditors.

5. Submit Closure Documents to Companies House

Once the final accounts are submitted, file either the DS01 form for a strike-off or liquidation documents if applicable. Companies House will process these documents, and after the required notice period, your company will be dissolved.

6. Company Dissolution

Once all legal requirements have been met and filings completed, Companies House will strike your company off the register, and it will officially cease to exist.

Conclusion

If you’re planning to close your limited company and want to ensure everything is handled properly, Pro taxman can assist you at every step of the process. From preparing your final accounts to navigating the legal and tax requirements, we’ll make sure your company closure is seamless and stress-free. Contact us today to get expert guidance and support!