If your company is no longer required, you may have been thinking about closing it down and moving on. Dormant or unwanted companies remain registered at Companies House and as such, they can be resurrected at any time.
You will need to make sure you submit an Annual Return to Companies House. If you forget to file this, your business is likely to be given a late filing charge.
Closing a solvent company because it is no longer trading or no longer serves a purpose is quite a common practice and there are two options currently available that you could use; a dissolution or a member’s voluntary liquidation (MVL).
Dissolution – strike off at Companies House
A dissolution is when you voluntarily end your company’s legal existence by striking it off the register at Companies House. Directors usually apply for dissolution when a company has reached the end of its life. You should be sure that you have not traded for at least three months and that you have no outstanding legal or insolvency procedures against you.
To apply to strike off your company, you will need to fill out an application form and send that as well as £10 to Companies House. After your application has been received, there will be a three month period in which shareholders, creditors and those who have/had a relationship with your company can make any objections. If there are no objections after this period, your company will be struck off the register and will cease to exist.
For six years after the successful dissolution, your company can be reinstated if any creditors, shareholders etc. do not agree with the dissolution or wrongdoing is suspected. To find out more about this, visit our dedicated Dissolution page.
During the dissolution process, you will need to:
- Inform HMRC of your intention to close your company
- Cancel your company’s VAT registration
- Complete your final payroll including P45’s for all employees
- Pay all outstanding PAYE and National Insurance contributions
- Submit your final accounts to HMRC including your company’s Tax Return
Member’s voluntary liquidation (MVL)
An MVL is a tax efficient way to close a solvent company, remove it from the register and release your share capital out of a company whilst benefiting from Entrepreneur’s Relief. You can use a MVL to withdraw your investment but you should be aware that distributions over £25,000 that you take from the company fall under tax rules for capital distributions and as such will be subject to Capital Gains Tax (CGT).
Using an MVL means that you will usually be eligible for Entrepreneur’s Relief reducing the level of CGT you will pay to only 10%. To find out more about this, we always recommend you get in touch with a tax specialist to discuss this further.
Much like the dissolution process, the MVL process is relatively simple and straightforward for you as director and/or shareholder of the company.
- Firstly, get in touch with Wilson Field. As licensed and regulated insolvency practitioners (IPs), we will be able to talk you through the process of an MVL and prepare all the necessary paperwork for you.
- Before we can go any further, we will need you (and any other directors) to sign a Statutory Declaration of Solvency to prove that the company is solvent and therefore can go through the MVL process. For more information about this visit our dedicated MVL page.
- We will then be able to arrange everything else once this has been done. We will issue any creditors or legal notices, call any necessary meetings and guide you through the process at all times.
- While we are doing this, you will be able to enjoy your retirement or move on in the next stages of your career.
- Once the company has been dissolved, all director obligations will be removed from you and any other directors.
- We will then make distributions to you and any other shareholders of the company as soon as they become available to us.
Prior to entering the MVL process, it is beneficial if you can:
- Ensure all liabilities are paid and are up to date
- Sell all remaining assets of your company
- Collect all monies owing to the company
- De-register your company for VAT and as an employer
- File the latest set of accounts and make sure they are complete to the date the business ceased trading.
However if your company is insolvent, whether it is dormant or not, you should get in touch with us as soon as possible to discuss your current financial situation. We will be able to help you find the best solution for your company whether it is a company voluntary liquidation (CVL), company voluntary arrangement (CVA) or administration.
If you are thinking of closing a solvent company as it is no longer required or your company is struggling and has become insolvent, contact us on 0800 901 2475 as soon as possible.