Closing a Limited Company
Closing a limited company can be complicated and you will usually need the agreement of its directors and shareholders. If you are thinking about closing down your company Keystone Recovery can advise you on the options available.
The correct process is likely to be determined upon whether the company can pay its debts, or not.
Closing a Company that cannot pay its debts
If your company is unable to pay its debts as and when they fall due, it is insolvent. In this case you may want to close your company and start afresh or close it down and walk away.
If so, Creditors Voluntary Liquidation (CVL) could be an appropriate solution. It is usually the only option if there are serious issues with cash flow or the business has no viable future in its current form. The process involves closing the limited company by realising its assets in order to repay creditors on a pro-rata basis.
In some circumstances you may be able to restart the business through a newly incorporated limited company. There are rules relating to the re-use of a company name so if you intend to start afresh then it is important to take advice from a licensed Insolvency Practitioner.
Closing a Company that can pay its debts
If your company is able to pay its debts as and when they fall due and has assets greater than the value of its debts, then it is solvent. If the company is likely to have at least £25,000 left over for distribution to shareholders, once all other debts have been settled, then Members Voluntary Liquidation (MVL) may be the most cost-effective way of closing the company.
The MVL process involves closing the limited company and realising assets to repay creditors in full, before distributing the surplus cash to its shareholders as a capital distribution. The main advantage of this it allows shareholders to take advantage of Business Asset Disposal Relief (formerly known as Entrepreneurs Relief), which makes an MVL a tax-efficient way to close a limited company and draw final dividends.
If your company is likely to have less than £25,000 left over for distribution to shareholders then you could close down your limited company by getting it ‘struck off’ the Register.
There are certain conditions which you can read more about here.
What if my company is threatened with compulsory closure?
If your company is threatened with a winding-up petition then it is important to seek advice as early as possible. If not dealt with a winding-up petition will lead to a winding-up order being made against your company. If this happens then the company will be unable to trade and the Official Receiver will be appointed as liquidator.
How can we help?
If you are looking to close down your company, we can help guide you through the potential options and advise you on the best route forward. Our team offers practical, transparent advice, and our practices and procedures are regularly monitored to ensure that we adhere to strict guidelines and code of ethics.
Contact us for a no obligation chat about options available.
