Voluntary dissolution can be used to close down your limited company under specific circumstances.
The process includes removing the business from the Companies House register, on which all official company data is displayed. Once the name is removed from this register, it will no longer legally exist.
The most important thing to remember is that you cannot dissolve your business if it has significant debts to its name, and you must meet the following requirements:
- Your company has not traded for three months (this must be a genuine cessation of trade).
- Your company has no assets, property, or cash at the bank.
- Your creditors are informed, and you have requested their permission for the dissolution.
- Your creditors are given three months’ notice to consider the request to dissolve your company. They can also reject this request.
- Your company has not changed its name in this period.
- Your company has not disposed of any assets or property (this may include land and buildings, plant and equipment, debtors, and other assets).
Steps for dissolving your limited company
If you decide to close your company through voluntary dissolution, it’s recommended you take the following steps.
Remember that if your business still has debts or is trading while insolvent, these steps are not applicable.
- Establish the date when your company will cease trading and let everyone know – including your creditors and all shareholders.
- If the option you choose is not the same as your regular accounting date, then you’ll need to obtain an AA01 form, then complete, sign and return it to Companies House, as well as send a copy to HMRC.
- As soon as your agreed ‘ceased trading’ date has gone, contact HMRC to let them know you’ve stopped and that there will be no further taxable income. Also, inform them that any final accounts will follow in due course.
- If you employ people or are registered with a Construction Industry Scheme (CIS), you’ll need to inform HMRC that both schemes are no longer required.
- If your business is VAT registered, you’re required to complete a VAT form 7 before preparing your final VAT return.
- You must register with HMRC if you’re planning to become a sole trader afterward. On the other hand, if it is not your intention to be a sole trader or a partnership, and you will instead be going back into employment or retiring, let HMRC know that you won’t require any further tax returns after completing your final one.
- Preparation of your final accounts with your Corporation Tax return and submit them to Companies House and HMRC.
- Three months after the closing date, you can then complete a DS01 form to apply for your company to be taken off the Companies House register.
- Companies House will publish your details in the London Gazette and then, after a further three months – providing there are no objections from creditors or other parties – your company will be dissolved.
Are there any disadvantages to dissolving my company?
There can be severe consequences if you provide any false information (deliberately or otherwise) during your application or fail to notify an interested party of your decision to dissolve.
This can lead to disqualification as a director, a considerable fine, or, even in extreme cases, imprisonment.
If any creditor believes your business has not been closed down through the correct channels or has evidence to back up another reason for arguing against the closure.
In that case, they can appeal for your business to be restored to the Companies House register. If substantiated, this would allow them, and any other outstanding creditors, to chase your company for any unpaid debts.
If you are thinking of dissolving your company and would like to know more, don’t hesitate to get in touch with the Future Strategy team today.