Can I close a company myself?

It is possible to close a limited company yourself, but initially, you need to consider the company’s financial position. If it has the money to repay all of its creditors you can voluntarily strike it off the register at Companies House.

It’s important to be certain that your company is solvent before taking this route, however. If you’re mistaken and the company cannot afford to pay its creditors, the consequences of trying to close the business yourself can be serious.

The voluntary strike off process involves gradually winding down your company’s affairs over several months. Apart from the requirement for solvency, to be eligible for voluntary strike off your company must not have:

• Traded or sold off any stock for three months
• Changed its name during the previous three months
• Entered into any formal agreement with creditors, such as a Company Voluntary Arrangement (CVA)

Form DS01 is used to dissolve your company – you can complete the form online and submit it to Companies House along with a small administrative fee. A copy should be sent to any directors who haven’t signed the form, and also to creditors, employees, and shareholders.

Companies House place a notice in the Gazette announcing your intentions to close down. If no objections are made, the company name is removed from the register and your business ceases to exist.

So are there any other considerations before striking your company off?

Although you cannot actually close the company yourself using Members’ Voluntary Liquidation, if the company has retained profits of £25,000 or more you can instigate the process by appointing a licensed insolvency practitioner.

MVL is a tax-efficient option as distributions are taxed as capital rather than income. Asset Disposal Relief, formerly known as Entrepreneurs’ Relief, can further lower your tax liability to 10 per cent if you’re eligible to claim.

Members’ Voluntary Liquidation may also be a good option if your company’s affairs are complex. This is because the process is conducted by a licensed IP and you have the reassurance that your affairs are being dealt with professionally.

The MVL procedure involves repaying all your creditors, selling or distributing the business’s assets, and apportioning the profits amongst members. Once this process has been completed the company is removed from the Companies House register.

What happens if your company is insolvent, however? Can you still close it yourself?

You can’t close an insolvent company yourself as you have to appoint a licensed insolvency practitioner and follow an official procedure. This is called Creditors’ Voluntary Liquidation (CVL) and it involves selling your business assets at auction.

The proceeds are distributed according to a statutory hierarchy of creditors and debts that remain are written off. A notable benefit of entering CVL, for yourself as a director, is the possibility that you could claim redundancy pay, which could help to fund the process.

Closing down a limited company isn’t always straightforward, and needs careful thought before deciding on the most appropriate method. For example, it’s highly recommended that you’re certain of your business’s official financial status so that you know you’re taking the correct route.

Company Closure can provide tailored advice on closing your company according to its circumstances. We operate an extensive network of offices around the country and offer free, same-day consultations.