Is your business reaching the end of its life cycle? – Applying for a voluntary liquidation

There are many reasons why the directors and shareholders of a company may apply for a voluntary liquidation. These could include retirement, the company reaching the end of its life cycle, or wanting to disincorporate and become a sole trader or LLP.

If the company is solvent and can pay its bills, then the shareholders can apply to have the company struck off the Register of Companies at a relatively low cost. You can only apply to have your company struck off if it:

  • hasn’t traded or sold off any stock in the last three months
  • hasn’t changed names in the last three months
  • isn’t threatened with liquidation
  • has no agreements with creditors

Close the company down – the company must be closed down legally before applying to strike off. This means informing the relevant individuals/entities within 7 days of filling in an application to strike off. Form DS01 ‘Striking off a company from the Register’ needs to be filled in and signed by the majority of the company’s directors. The form must be submitted to HMRC with a £10 cheque.

Employees and HMRC – employees must be notified. Redundancy rules must be followed and final wages and salaries must be paid. The company also needs to inform HMRC that the company has stopped employing people.

Company assets – it is important to make sure that business assets are shared among the shareholders before the company is struck off. Anything left when the company is struck off will go to the Crown. You will have to restore the company to get anything back.

Final accounts – final accounts need to be prepared for the period from the date of the last set of accounts filed with Companies House to the date the company ceased to trade. Final accounts do not need to be submitted to Companies House. These are instead sent to HMRC with the company’s final corporation tax return. It must clearly state that these accounts are the final trading accounts, HMRC will then know that the company will soon be dissolved.

Loss making in the final year of trading? – The company might be able to offset the loss against profits from previous years through terminal loss relief.

Final step – Pay any corporation tax due and any other outstanding liabilities.

Once your strike off application has been received by Companies House, you will get a letter to let you know this has been filed correctly. If nobody objects, the company will be struck off the Register once the 2 months mentioned in the notice has passed.

 

Blog written by Theresa Dance

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