Depending on the particular circumstances of the business, closing a limited company can either be a simple process or a more complex matter requiring professional guidance and assistance. With this in mind, we have gathered the essential information about the different methods you can use to close a limited company, including costs, permissions, timescales, and much more.
If you have any further questions about dissolving a limited company, leave a comment at the end of the blog and we’ll do our best to help.
How to close a limited company
If you decide to close your limited company, you will need to apply to Companies House to have it wound up and struck off the register. The process you use will depend on whether the business is solvent (able to pay its bills) or insolvent (unable to pay its bills).
If it is solvent, the directors can apply to Companies House to have it voluntarily struck off the register. Alternatively, you can start a members’ voluntary liquidation.
If your company is insolvent, the directors can propose a creditors’ voluntary liquidation process. This course of action will require at least 75% of the voting shareholders (by value of their shares) to agree to the closure by passing a winding-up resolution.
In certain situations, an insolvent company can be forced into liquidation by its creditors or HMRC. This is known as compulsory liquidation.
Striking off a solvent company
The easiest way to dissolve or close a limited company is to complete a ‘Striking-off’ application for Companies House. To be eligible, the company must satisfy all of the following requirements:
- has not traded or carried on any kind of business within the last 3 months
- has not changed its name within the last 3 months
- is not subject to any proposed or current legal proceedings
- has not made a disposal for value of property or rights
If your company meets these conditions, you must download and complete Companies House Form DS01. The form needs to be signed by a majority of directors and delivered to Companies House online or by post, along with the £33 filing fee (£44 filing fee if by post).
Within 7 days of submitting the application, copies should be provided to all notifiable parties, including:
- creditors
- employees
- company shareholders
- pension managers or trustees
- other directors of the company
- any person who becomes a notifiable party within 7 days of the application being made
If Companies House is satisfied with the application, it will display the information on the public register. Depending on the Companies House jurisdiction in which your company is registered, a ‘Notice’ will also be published in the Gazette in London, Edinburgh, or Belfast to confirm your intention to close the company.
The purpose of this official notice is to provide an opportunity for third parties to object to the proposed striking off. Provided no objections are raised within a 3-month period, Companies House will post a second notice in the Gazette to confirm that the company has been wound up and struck off the register.
Members’ voluntary liquidation of a solvent company
This process is available to solvent companies that do meet the criteria for the ‘striking off’ application. To dissolve a limited company by way of a members’ voluntary liquidation, the directors must declare that the business can pay its debts in full within 12 months from the start of the winding-up process. The following steps will be required:
- Companies registered in England and Wales should make a Declaration of Solvency. Companies registered in Scotland should request Form 4.25 from the ‘Accountant in Bankruptcy’
- Within 5 weeks, the company directors should propose a special resolution to voluntarily liquidate the company. This will normally require at least a 75% majority vote to approve the resolution. When the special resolution is passed, notice should be published in the Gazette within 14 days
- A liquidator must be appointed to take control of the business and oversee the winding-up process
- The liquidator must complete and submit Form LQ01 to Companies House within two weeks of their appointment
When the liquidation process is complete, the insolvency practitioner will call a general meeting of the creditors and members. A full progress report of the liquidation will be presented at this final meeting. Notice of the meeting should be advertised in the Gazette at least one month beforehand.
The progress report must be sent to Companies House within one week of the meeting, along with a Return of Final Meeting. The company will be dissolved within approximately 3 months of filing the progress report and Return of Final Meeting at Companies House, unless the court makes an order deferring the dissolution.
Creditors’ Voluntary Liquidation of an insolvent company
A creditors’ voluntary liquidation will be required if you wish to close a limited company that is unable to pay its bills. To start this process, a director should call a general meeting of the shareholders. A special resolution of the shareholders must be passed to initiate the winding-up process. The director(s) must then:
- appoint a liquidator to take charge of the company and oversee the liquidation
- send the resolution to Companies House within 15 days of the meeting
- advertise the resolution in the appropriate Gazette (i.e. London/Edinburgh/Belfast)
The company should also hold a creditors’ meeting within 14 days of passing the resolution. Creditors must be given at least 7 days’ notice of this meeting and it will also need to be advertised in the Gazette. A Statement of Affairs (summary of the company’s assets and liabilities) must be presented at the creditors’ meeting, and a copy should be given to the liquidator afterward.
The liquidation process will be completed when all assets (if any) have been converted into cash and paid to creditors in order of priority. The company will be struck off the register within approximately 3 months of the liquidator holding a final meeting.
Compulsory Liquidation by creditors or HMRC
If your company cannot pay its bills and you are unable to reach an agreement with your creditors, they can make an application to the court for a winding-up petition to have your company closed. It will be put into liquidation and its assets (if any) will be sold by the appointed liquidator.
If you are dealing with insolvency issues, we would urge you to seek professional advice as soon as possible.
How long does it take to dissolve a company?
Generally, it takes at least 3 months from the winding-up notice being advertised in the Gazette to dissolve a limited company, but the length of time can vary considerably if the process is complex.
How much does it cost to close a limited company?
Aside from paying outstanding debts and wages, there are various administrative costs associated with the closure of a company. The amount you will have to pay will depend on how the company is wound up:
-
- Striking off a solvent company – This is normally the cheapest option. You will be required to pay a £10 disbursement fee to Companies House when the striking-off application is submitted
- Members’ Voluntary Liquidation – You will be required to pay the liquidator’s fee, which can range from upwards of £1500 plus VAT. The total cost will depend on the complexity of the liquidation process. Many liquidators will quote a fixed price for their services. You will also have a pay a fee to the Gazette for advertising the liquidation of your company.
- Creditors’ Voluntary Liquidation – This is usually the most expensive way to close a company. The liquidator’s fee is based on the complexity of the process and the amount of work required. Typically, you should expect to pay around £3000 to £7000. If a company’s assets do not cover these fees, the directors may be personally liable for the costs
- Compulsory Liquidation. This is a type of closure that is forced by creditors or HMRC. The cost of issuing the winding-up petition is also paid for by the creditor, rather than the company, but any assets and finances belonging to the company will be seized by a liquidator and used to pay the creditors.
What permissions do I need to close my company?
To dissolve a limited company that is solvent, you must get permission from a majority of the directors. They will indicate their consent by signing the striking-off application that is then submitted to Companies House.
To dissolve a limited company by way of a members’ voluntary liquidation or creditors’ voluntary liquidation, a 75% majority of shareholders’ votes must be cast in favour of winding up the business.
If a third party wishes to force the closure of the company, permission must be obtained from the court by applying for a winding-up petition.
Can anyone object to a company being wound up?
Objections can be made to Companies House by any interested party, including shareholders, creditors, employees, directors, and clients. An objection can even be made by the company itself if the striking-off application is bogus. All objections must be in writing and should be accompanied by supporting evidence.
Do I need to notify HMRC if I want to close a limited company?
You will need to notify HMRC if you decide to dissolve a limited company. Before doing so, you should settle any outstanding debts that are due to be paid by or to the company and then close your business bank account(s). You must then tell HMRC that your company has ceased trading and is ‘inactive (dormant) for Corporation Tax purposes.
Your company will be required to submit a Company Tax Return and pay any outstanding Corporation Tax liabilities from the accounting period before the start date of the winding-up process. You may also need to pay Capital Gains Tax if you dispose of any business assets.
A final Company Tax Return and Corporation Tax payment may be required when the winding-up is complete. Directors may also have to account for personal gains or losses made on the disposal of assets and shares. These should be reported on their Self Assessment tax returns.
You must ensure that the company payroll is closed down. A final Full Payment Submission (FPS) should be submitted when running the final payroll, and you will need to pay any outstanding PAYE tax and National Insurance deductions by the given deadlines.
If your company is registered for VAT, it should be de-registered. A final VAT return must be filed and any outstanding VAT liabilities should be paid.
Do I need to tell HMRC my company has been closed if it never traded?
If your company has been dormant from the date of incorporation, it should be classified by HMRC as ‘inactive’. In such cases, the company will not be registered as ‘active’ for Corporation Tax purposes or any other tax liabilities like VAT or PAYE.
As long as the company has not received or spent any money during its lifetime, and no capital gains have been made from selling or disposing of any business assets, you should not have to pay any business taxes or file any tax returns.
- Don't let Companies House dissolve your company - close it here
- Closing a limited company without paying tax
However, we highly recommend contacting HMRC to confirm the status of your company to ensure no obligations have arisen as a result of closing the business. When contacting HMRC, you will be asked to provide your company’s unique taxpayer reference, so make sure you have this to hand before calling.
Can I re-open a previously dissolved company?
It is possible to restore (re-open) some dissolved companies by applying for a court order or by Administrative Restoration. If you wish to restore a dissolved limited company by court order, we strongly advise seeking independent legal advice.
You can apply to Companies House for a restoration if the company was involuntarily struck off – e.g. by the Registrar as a result of failing to file an annual confirmation statement or annual accounts. However, administrative restoration is not possible if the company was struck off voluntarily.
Join The Discussion
Comments (50)
Can I close my medical private work company( I am a hospital doctor), pay the entrepreneur relief tax and then carry on doing private medical work with the fees paid directly to myself?
Thank you for your kind comment.
Unfortunately as we are not regulated to provide accountancy advice, we are unable to provide advice on specific scenarios. We would recommend contacting an accountant for further assistance.
Please accept our apologies for any inconvenience caused.
Kind regards,
The 1st Formations Team
Hello, If I want to close my ltd company (the business just doesn’t work, all debts are paid) and I have some inventory (clothes) what do I do with the clothes when closing the company? Can I donate it to charity?
Thank you
Thank you for your comment, Vera. Yes, this should be fine; however, we’d always recommend speaking to an accountant for advice.
Kind regards,
The 1st Formations Team.
Hi,
Can HMRC excempt VAT if Business that was started in Covid couldn’t run in 8 months and was a fail. Also it has No profit and No loss situation.No trading happened with No assets. And the director is Bankrupt.
Still have to pay huge VAT debt?
What could be the best possible option??
Thank you for your kind enquiry, Sam.
In general terms, companies that have not traded do not have any issues when it comes to VAT, as they would not have charged it and therefore owe nothing to the government.
We trust this information is of use to you.
Kind regards,
The 1st Formations Team
Hello,
I have my LTD with debts to an Overdraft, Bounce back loan and HMRC.
I can’t afford paying Liquidation.
How can I close it without personal responsibilities please?
Thank you for your kind enquiry, Spyros.
In general terms, if your company is forced into liquidation, a shareholder will only be liable for the nominal value of the unpaid shares in the company, unless something criminal/fraudulent has taken place, in which case they may become personally liable.
We trust this information is of use to you.
Kind regards,
The 1st Formations Team
My question relates to the dissolution of a company limited by guarantee with members. The company has adequate cash in the bank to meet its liabilities and is actively trading.
Am I correct in believing that this company can only be dissolved by a special resolution supported by 75% of its members?
Thank you for your kind enquiry, Matt.
Assuming that you are referring to a members’ voluntary liquidation – then yes, a special resolution that is passed by the requisite 75% of votes (supported by a solvency statement by the directors) should enable the start of this process and the appointment of a liquidator.
Please note, although we can’t provide advice on specific cases, a company that is trading would not be able to use the strike off (DS01) process. Further, strike off would be a decision made by the directors as opposed to the members.
We trust this information is of use to you.
Kind regards,
The 1st Formations Team
Thank you for the informative post! I want to have my one-person Ltd company voluntarily struck off the register. I believe it meets all the three month criteria as you’ve described. However, I have made a very small loss, and the company still owes me £600 which I gave as a directors loan.
1. Can I take back the remaining £500 to my personal account and start the striking off application immediately?
3. I’ve never taken a salary or paid anyone via the company, so I’ve never filed FPS – only EPS. Should I file an EPS before the application or wait to be contacted by HMRC to file the final account? What about the final account with Companies House?
3. Is it a problem that I am moving to a different house in just a month?
Thank you very much!
Best,
Jane
Thank you for your kind enquiry, Jane.
It is possible that the repayment of your directors loan might be a cause for your company not to be eligible to strike off. You may want to consider adopting a cautious approach by waiting until three months after you have made the £500 payment before submitting the strike off application or alternatively by seeking specific advice on this matter.
In relation to the final accounts – you will need to deliver a set to HMRC before closing your company. Companies House takes a different position insofar as they do not require a final set of accounts to be delivered before the company is struck off. However, as it is best practice to do so, you may want to consider this (particularly if your accounts are already due).
As regards your EPS question – this is something we are not able to answer as we are not accountants.
Finally, from a Companies House perspective, I don’t think it is an issue that you are moving house in a month. You would still want to update your records when you move – namely your director and Person of Significant Control filings within the required deadlines (14 days and 28 days, respectively).
We trust this information is of use to you.
Kind regards,
The 1st Formations Team
Hello!
I have a question regarding striking off a solvent company that meets all conditions stated in the article.
If the company has only 2 directors, where the main director/shareholder owns 60% and the situation is such that the business has no future and he proposes closing down the business, in the event of a disagreement with the other shareholder, could still the main shareholder proceed with filling the Form DS01 with only his/her signature and achieve a successful application from the Companies House perspective?
Kind regards
Thanks for the question.
It’s best to check this directly with Companies House.
The DS01 form requires ‘A majority of the company’s directors must sign the form. For example, if the company has 2 directors then both must sign. If the company has 3 directors then at least 2 must sign.’
Regards,
The 1st Formations Team
Thank you for your very informative site. I am dissolving my company. The company meets all the HMRC requirements for dissolution. My question is ‘what happens to my £1 share that I paid when I opened the company’. Thank you
Thank you for kind enquiry.
When a company is voluntarily dissolved, all paid up share capital (i.e. your £1 share) are passed to the ownership of The Crown. You will not receive this money back.
We trust this information is of use to you.
Regards,
The 1st Formations Team
Hi,
Can I just clarify that DS01 should not be filed until three months meeting the above criteria have passed . Or does the time it takes for Companies House to process it count towards the three months.
Kind Regards,
Andy
Thank you for your kind enquiry, Andrew.
The DSO1 can be filed as soon as you meet the criteria listed in our blog. It takes between two to three month for Companies House to officially dissolve the company. This is because they publish the intended dissolution in the local Gazette, to enable any creditors who may come forward to challenge the dissolution if necessary.
I trust this information is of use to you.
Regards,
John
Hi,
Could you please advise on my situation, I was having a pvt. limited company on which I was the only director. The company had no business, even it was having no business account. It got delayed of it’s confirmation statement while I was deciding to dissolve the company. I took a professional service and they said if you are dissolving this company then you don’t need to submit any confirmation statements and accounts. The dissolvency process has already been started. Could you please advise if this is the correct process. Thanks
Thank you for your kind enquiry, Raj.
It is correct that you a private limited company does not need to file a confirmation statement in an instance where the voluntary dissolution process has already been started with Companies House by way of submitting a DS01 form. Therefore we do not believe there is anything from you to worry about, based on the scenario you have described.
I hope this information is of use to you.
Kind regards,
John
Hi, I’ve recently successfully dissolved my company on the 17th of December, in the process of doing this I didn’t contact HMRC to let them know it has been dissolved, the company was dissolved before the first years’ tax return was due, do I still need to contact HMRC to give them accounts, the company never officially traded but I did use the company bank account
Thanks in advance
Thank you for your kind question, Dominic.
In this instance we recommend you contact HMRC directly on 0300 200 3410. You should have your dissolved company’s Unique Tax Reference (UTR) number to hand when you call.
I am sorry we cannot be of more help on this occasion.
Kind regards,
John Carpenter
Hi,l formed a limited co,after l was coldcalled by a payroll company who told me it was really tax efficient and id be far better off.now after three years lve realised this is not the case.the thing is the company is registered at their address and l pay them annually a fee of £2000 .will it be straightforward to shut it down or do they hold some of the aces.ie can they make it difficult for me.thankyou….
Hi Chris,
Thank you for your question.
In general terms, only a majority of the directors of a company can carry out a board resolution authorising the dissolution of that company. Therefore, unless the payroll company in question is a director, which seems unlikely given the scenario you have described, they only have the ability to prevent your company from being dissolved if they are owed money by your company. If your payroll company is owed money by your company whilst your company is attempting to dissolve, the payroll company can object to the dissolution by contacting Companies House. If Companies House deem that this objection is valid and that the debt to the payroll company should be paid prior to the dissolution of your company, your company may go into liquidation, at which point an administrator would be appointed to deal with your outstanding debts and creditors, prior to your company being closed down.
I trust this is of help to you.
Kind regards,
John Carpenter
Thank you for an informative site.
I am early 60’s wanting to retire early, currently solvent with £5k in the bank a vehicle and stock. I am the only director and my wife is the secretary and on payroll. Just the two of us. No debts.
Do I need a liquidator or will my accountant be able to wind my business up?
What would be the most cost effective way of doing this most common situation please?
Dear Colin,
Many solvent companies with no debts can opt to dissolve the company instead of liquidating. The dissolution process involves the directors agreeing to close the company and sending a request to Companies House to shut it down. To be eligible for dissolution, a company must not have traded or changed its name in the last 3 months, be subject to legal proceedings, or be about to enter liquidation or a credit agreement (CVA). Dissolution is usually the cheaper option, however there may be tax implications to consider. We offer a Company Dissolution service which can be found here: Company Dissolution Service – alternatively, you can call our Company Secretarial Team on 020 3984 5387 if you require further information.
Kind regards,
John Carpenter at 1st Formations
Hi,
Thank you for this information. I am hoping you can help. I struck off my company a year ago. I had registered it 2 years previously with companies house, but due to personal issues I never actually started trading.
I received a £700 late penalty fee and was advised to close the company.
Fast forward a year…I am now in a position to start trading. But, all my marketing material, website has my companies name on (that was registered with companies house).
Could I continue.to trade under that name as a sole trader? If I registered as a Ltd again, how different would my name have to be?
Any advice appreciated
Thanks
Jessica
Thank you for your kind enquiry, Jessica.
A company name becomes available for us by any other company when a company is dissolved by companies house. If your company name has not been taken by another company, you can start a new company and use the old company name, without issue. This would save you having to change any marketing material etc.
Should the company name no longer be available, you would need to choose a new name, which cannot be too similar to, or be the same as a name currently on the register (i.e. your old company name). This includes if you add words or characters which Companies House ‘see through’ – such as added an ‘S’ at the end, or ‘UK’, etc – which Companies House would still view the same as.
Given we are company formation experts, I would suggest you should give us a call on 020 3897 2233, and we will be able to help you with your specific query and get you set up with a new company (possibly with the same name as previously) in no time at all.
We trust this information is of use to you.
Regards,
The 1st Formations Team
Our turnover less than 75000 pound with loss about 5000 pound , we like to dissolve our company ? Still I need to notify HMRC for final account and tax return and to dissolve… I need to send DS01 form with sign and fee. What else I need to do before I can apply for dissolve properly and quickest way. plz reply
Dear Basar,
All companies that intend to resolve should submit their final set of accounts and tax returns to HMRC before they dissolve. Once that is completed, the directors should resolve to dissolve their company, provided they meet the eligibility requirements – i.e. they have not traded or changed their name in the last 3 months, not have any legal proceedings against it, and not be about to enter liquidation, and not have entered into a credit agreement. The company can then apply for a dissolution to Companies House via a DS01 form or via a Company Dissolution Service, such as the one we offer here.
Kind regards,
John Carpenter at 1st Formations
I am one of 2 Directors of a company which we think is trading insolently (we have a meeting with the accountant next week). We have both overdrawn from our directors loan account, have a corporation tax liability of about 14k and will have some VAT and NI liability too. Other than that we only have some agreements for services rather than big debts.
Will we have to pay back our loan accounts for dividends (less than 10k each)?
Where do we stand with the corporation tax etc
Hi Lynne,
I would advise speaking to your accountant about this next week – I am not an accountant so I’m afraid I cannot offer any professional guidance on this matter.
Best wishes,
Rachel Craig
Good evening,
First of all thanks for creating and maintaining such an informative website and helping people like me. Let me explain my situation in here. I have a limited company trading for last 3 years. I am the sole director of the company owning 100% shares. Due to some personal reasons, I have decided to stop trading from next month onwards. My FY runs from Nov to Nov. Company still has 60K on its books and has no liabilities or debt. My question is –
1. Can I continue to operate the company and pay myself salary and dividend for next two to three years without generating any income in the company?
I am in no hurry to get the money out from the company. I would be greatly benefited from a constant income in the form of dividends as I think for next two years I will not be getting any other income from any source. Also this is the most tax efficient way.
2. If not, what is the best tax efficient way to get the money out by paying as minimum tax as possible?
Hope to get an answer from you.
Thanks
P
Hi,
Thanks for your message.
Yes, you can continue to operate your company without generating income, but you will still have to file tax returns, accounts, etc. I would, however, recommend speaking to an accountant for professional advice about the most tax efficient way to withdraw money from the business.
Best wishes,
Rachel Craig
Thank you for the answer
regards,
P
Good Evening
I have just found out on the Government Website that my Letting Agents company has been dissolved but we have not been notified of this. We have continued to pay our rent payments to this company via bank transfer thankfully, What I’d like to know is this lawful to except payments from tenants after the company ceases to exist? He is still on the web using the Company name from a different address and phone number we are totally confused !! Can you give us any sound advise please ?
Hi Pete and Karen,
Thank you for your message.
What an odd situation. He may have set up a new company or chosen to operate as a sole trader under the same name, but you should have been informed of any such changes.
I would advise contacting the letting agent in the first instance to ask for an explanation. If you still have any doubts after doing so, you should contact Companies House immediately. They will be able to advise on the next course of action.
Hopefully it’s nothing sinister and all works out well! Let me know how you get on.
Rachel
Hello. I have a non-trading limited company with no debts that I am looking to close this year. My accountants have advised me that the process is difficult to do and recommend I pay to use their services at a cost of £500. Does anyone think this is reasonable or am I being taken for a ride here?
Thanks
Hi Martin,
That does sound quite excessive but it depends on the amount of work they will have to do. I’m unable to say with certainty without all of the necessary information. I would suggest getting a no-obligation quote from a few other accountants to see whether the fees are compatible.
Best wishes.
I am in the process of dissolving a limited company. my business partner and i have agreed to split all our stock and assets. Can i sell my share of the stock privately after dissolving the company?
Hello,
The stock will belong to you when ownership is transferred and the company is dissolved. You should be able to dispose of the stock if you please, but you may face certain tax liabilities on your next Self-Assessment return. I would run it past your accountant before taking any further action.
Best wishes.
yes you will, you are screwed!
Hi, Last year I set up a Ltd company, but then decided to be a sole trader and registered as such. In the meantime I forgot all about my ‘Ltd’ company (only me as the director) and I received a notice to submit first yearly accounts by 24/12/15. I’ve never even traded!
I’ve filled in the form to dissolve my company and send the fee. Companies house received it on 07/12/15.
What happens now? Will they still chase me for the accounts? Will I be fined?
Dear Adele
Thank you for your message.
Now that strike off proceedings have commenced, Companies House will not expect you to file accounts with them. You may need to contact HMRC to advise them that you are striking off your company and that no accounts will be filed and they can advise if they require anything to allow the strike off to be accepted.
Kind Regards
I am in the current process of dissolving my Limited company via “companies House” I am receiving letters from debt collectors for a outstanding balance for a VAT bill which I was unable to pay as the company was not making enough money at the time nor was anyway near the threshold for being vat registered. Whilst waiting for my company to be dissolved what can I do ? And when my company is dissolved will I still be liable to pay this outstanding VAT bill ?
Many thanks
Dear Amy
Thank you for your message
I cannot advise on how you would go about making the payment for the vat liability. I would note that if your company is dissolved then the company cannot pay the liability after the dissolution date because the company no longer exists.
Kind regards
i have recently dissolved a Ltd company before its first submission of its accounts. Do i still need to send in those accounts at the end of the year?
Dear Azim
Thank you for your message.
If your company has been dissolved and you have received the confirmation from Companies House then you have no further obligations as the company no longer exists.
Kind Regards
I have applied for dissolution of my limited company – which currently opwes £1k on a business c/card. I have no company assets and would like to pay the £1k if i can – How will this affect the dissolution, and can I trade again with the same name minus the limited?
Dear Mal
Thank you for your message.
The rules regarding dissolution of a company state that there should be no transactions within the 3 months prior to dissolution so you cannot pay the money for the outstanding balance otherwise this invalidates the strike off procedure.
In terms of trading with the name without the limited, as a sole trader you are normally able to use a trading name. The situation of previously having a Limited company with the same name is not a problem.
Kind Regards