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Are you thinking of, or being forced to close your limited company in the UK? You might be considering this option for various reasons, such as a change in your circumstances or a downturn in your business’s performance. Whatever your reasons, it’s essential to understand the costs involved in the process.
The cost of closing a limited company in the UK depends on several factors, such as the size of your business, the complexity of its finances, and the number of outstanding debts or obligations.
At Future Strategy, we boast a wealth of experience as company debt advisors. We can provide sound advice on the options and associated costs and take care of the company closure process on your behalf. Contact us today for a free initial consultation.
This guide provides an overview of the various methods for closing a limited company. We’ll outline when each option is appropriate and detail the costs involved to help you make an informed decision.
What are the Costs of Closing a Limited Company?
Closing a limited company with debts can cost around £5,000 plus VAT, but this amount may vary depending on the assets that need to be realised. In contrast, a solvent liquidation in a simple case may only cost around £2,000 plus VAT.
This section will provide you with a comprehensive overview of the costs of closing a limited company. We will discuss two main options: the likely costs of Voluntary Liquidation and Compulsory Liquidation. These are both different from dissolution.
Likely costs of a Voluntary Liquidation
If your limited company struggles to pay its bills, a creditors’ voluntary liquidation (CVL) may be the best option. It is a formal insolvency procedure that allows for liquidation of a company that can no longer pay its bills. Despite the name, the CVL is initiated by the company directors, who will call a general shareholder meeting to begin the winding-up process. A sale of company assets may cover the liquidator’s fees, as the liquidator gets paid in priority to other creditors.
However, a CVL is generally the most expensive way to close a company, with the liquidator’s fee costing anywhere from £3,000 to £6,000 based on the case’s complexity. If the company’s assets cannot cover these fees, the directors may be held personally liable for the costs. However, it’s worth considering that by opting for this form of limited company closure, you could be entitled to director’s redundancy pay, which averages around £12,000 and would more than cover the cost of liquidation.
At Future Strategy, we can advise you on the options and costs involved and deal with the closure process. Please do not hesitate to contact us for a free initial discussion.
If your company cannot pay its bills, and you cannot reach an agreement with your creditors, they can apply for a winding-up petition against your business. If the debt remains unpaid, the court may make a winding-up order, resulting in the closure of your company through a process called compulsory liquidation.
The cost of forcing a company into compulsory liquidation is substantial, with creditors typically paying £500-£800 to issue the winding-up petition, around £1,600 for the court deposit, and a filing fee of £280. The petitioning creditor initially pays these costs, hoping to recover them from the funds raised by selling the company’s assets. If there are assets to recover, a liquidator must be appointed, and their fee will range from £1,500 to £3,000 based on the case’s complexity.
At Future Strategy, we understand the stress and complications involved in compulsory liquidation. We can provide invaluable advice, guide you through the legal proceedings and helping to protect your interests.
What are the Costs of Closing a Limited Company Without Debts?
Closing down a limited company without outstanding debts is relatively straightforward. The most appropriate method of closing a limited company depends on its current financial and operational situation. The three most common methods for closing down a limited company without debts include Members’ Voluntary Liquidation (MVL), striking off, and Company Dissolution. This guide explores these options and outlines the costs associated with each process.
Members’ Voluntary Liquidation (MVL)
An MVL is a formal liquidation process initiated by company directors when the business is solvent, meaning it can pay all its outstanding debts. The purpose of an MVL is to liquidate the company’s assets and distribute them to shareholders. The cost of an MVL can vary depending on the case’s complexity, but it typically ranges from £2,500 to £5,000, plus VAT and disbursements.
Striking off a company is a simplified process for closing down a limited company. It involves applying to Companies House, and if certain conditions are met, the registrar will strike off the company from the register. Striking off is usually the cheapest way to close a limited company, with a fee of £10 payable to Companies House. However, additional costs may be involved, such as accountancy and legal fees, if any issues arise during the process.
Company dissolution is another way to close a limited company without outstanding debts. This process allows companies that have ceased trading to be removed from the Companies House register. This option is available to businesses that have not traded or engaged in any other significant activity during the past three months. The cost of company dissolution can vary depending on the circumstances, but it typically ranges from £150 to £300.
Looking for the most cost-effective method to close your limited company?
At Future Strategy, we can provide you with the best advice tailored to your specific circumstances. We offer a free initial consultation without obligation, so you can easily discuss your options. To get started, call us at 03337721808 or at firstname.lastname@example.org.
Our services include
Dissolving your limited company
Company dissolution or strike-off is a means of shutting down a limited company, with or without outstanding debts, contingent on your company’s specific circumstances. We can handle the application for dissolving your company and manage the proceedings through Companies House.
There are several grounds for choosing dissolution, such as a company that no longer fulfils its objectives or remains inactive.
Liquidating your limited company
Liquidating your company could be suitable if your business is insolvent or has no prospect of recovery. It involves selling off your company’s assets to pay off creditors and closing the business. After liquidation, the company ceases to exist.
We can outline the process, from assessing the viability of liquidation to referring you to a liquidator who will deal with creditors and overseeing the sale of assets. Contact us to learn how we can help you close your company.