Steps to Take to Close a Company Online
Your company might have reached the end of the road for many different reasons, but the time has come and now you need to close the company. The way you would do this is either through a voluntary strike-off, or a members’ voluntary liquidation (MVL). Alternatively, if you don’t necessarily want to close the company, you can make it dormant, so we will also explore this as an option.
Using voluntary strike-off to close your company online
The main way to close a company online is to apply for a voluntary strike-off. This process formally brings your business to an end and removes it from the register of companies.
There are conditions attached that must be met before applying to close your company online through voluntary liquidation. In particular, your company cannot:
- Trade or sell stock in the last 3 months,
- Have changed names in the last 3 months,
- Be threatened with liquidation; or
- Have any agreements with creditors.
If your company meets the criteria, it can take steps to officially bring its operations to an end, including:
- Dealing with remaining tax liabilities,
- Making employees redundant, paying final wages, and informing HMRC that the company is no longer an employer,
- Distributing assets amongst shareholders.
You will then need to submit your final statutory accounts and tax return to HMRC online. When closing the company it is not necessary to submit your final accounts to Companies House, but this can be done separately online.
Once you have completed all of these steps, you can proceed to close the company online through a voluntary strike-off. This application will need to be signed by more than half of the directors before it can be submitted.
Once you have submitted the application, you must send a copy of it to anyone who could be affected within 7 days.
The request will be published in the Gazette for 2 months. If there are no objections, it will be officially struck-off the register of companies.
After this, a further notice will be published in the Gazette to confirm that the company has been dissolved.
Please note: If the company employed people, you must keep a copy of the employers’ liability insurance policy and schedule for 40 years from the date the company was dissolved.
Using voluntary liquidation to close your company online
If your company does not meet the requirements for a voluntary strike-off, then you can close the company through liquidation. Also known as winding up a company.
Members’ voluntary liquidation can be used to wind up a solvent company where the owner:
- Wants to retire,
- Wants to step down from the family business and nobody else wants to run it, or;
- Does not want to run a business anymore.
This involves making a declaration of solvency, passing a resolution for voluntary winding up, and appointing an authorised insolvency practitioner as a liquidator.
The process of MVL is more expensive than voluntary strike-off, this is because of the liquidator being appointed. However, if the amount of retained profits to be distributed to the shareholders exceeds £25,000, the MVL will generally offer a more tax-efficient approach.
I’m not sure I want to close my company - should I make it dormant?
This essentially mothballs the company without having it struck off the register. This could be the option for you if you are considering trading again in the future. There is a small amount of administration involved in this, but it is minimal.
Companies House and HMRC have slightly different definitions of what a dormant company is.
The HMRC definition:
- A company the has stopped trading and has no other income, e.g. investments
- A new limited company that hasn’t started trading yet
- An unincorporated club or association run for the benefit of its members, and it owes less than £100 Corporation Tax
- A flat management company
The Companies House Definition:
- A company that has no significant accounting transactions during the accounting period.
- It should not have generated income or earned bank interest.
Because dormant companies have not carried out any business activities or received any income, they are inactive for Corporation Tax purposes as far as HMRC is concerned. As such, they do not need to file tax returns with HMRC.
However, they still need to file an annual confirmation statement and annual statutory accounts with Companies House. Simplified dormant company accounts can be used for this.
Dormant companies still appear on the register of companies.
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