Written by Director Huw Moseley:
With just a few months left of 2017, it’s the time of year when people start to get their affairs in order and up to date ready for the new year. It’s why I often get a spike in enquiries about this time to do with closing down companies that have been dormant throughout the year, or they’re no longer wanted as people move on to pastures new…
There are two options for closing a solvent* company:
- Dissolution – the popular option for small businesses, this simple and straightforward process whereby the company comes to a voluntary end and is struck off the Companies House Register, or
- Member’s Voluntary Liquidation (MVL) – a tax efficient way to remove the company from the register and release your share capital whilst potentially benefiting from Entrepreneur’s Relief to reduce the Capital Gains Tax you’ll need to pay.
Here are a few things to consider before you close your company through Dissolution or MVL:
- As long as your dormant or unwanted company remains registered at Companies House – you will need to submit an Annual Return. Don’t put off doing this because you are planning to close down the company as you are likely to face a late filing charge.
- For Dissolution – your company must not have traded for at least 3 months and you must have no outstanding legal or insolvency procedures against you:
o Together we will fill out an application form and submit it along with £10 – after which there will be a 3 month period in which shareholders, creditors etc can make any objections
o We will then need to cancel VAT Registration, complete final payroll and issue P45s, pay outstanding PAYE and NI contributions and submit your final accounts and Tax Return
- For MVL – before this process can begin, you and any other Directors will need to sign a Statutory Declaration of Solvency to prove that the company is solvent.
o Prior to entering this process, we can help you ensure all liabilities are paid, manage your remaining assets, collect all monies owed to the company, cancel VAT registration and de-register your company as an employer, and file your last set of accounts.
o We will then put you in touch with our trusted, licensed MVL practitioner who will file all your paperwork and make any distributions to you and other shareholders.
As you can see, there is a lot to think about when you finally make the decision to close your company – but the easiest thing to do is get in touch, and we can recommend the best option and make it as straightforward as possible.
*Please note – this blog ONLY applies to solvent companies. If your company is insolvent, whether it is dormant or not, give me a call as soon as possible and I’ll guide you through the options available to you.