How Can I Close my Vape Shop?
The future for vape shops is bleak following new legislation brought in by the UK government. Increasing numbers of insolvencies are expected in the sector as the sale of disposable vapes is to be banned by the end of 2025 or sooner.
Disposable vapes typically make up a significant proportion of annual turnover for vape shops and this could mean the end for vape retailers who were already struggling to survive in the current climate of rising costs and economic uncertainty.
If your vape shop business enters insolvency you must cease trading immediately to protect your creditors, otherwise you might be accused of wrongful trading. Company liquidation offers you a reliable route away from these accusations, as it places the interests of your creditors first.
Liquidation isn’t only for insolvent businesses, however. It can also be a good option if you want to close down a financially healthy vape shop, maybe due to retirement or to move into a new sector. A further closure method for solvent vape shop businesses is company dissolution.
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How do I liquidate my vape shop?
Liquidating an insolvent vape shop
Creditors’ Voluntary Liquidation (CVL) is a formal way to close your insolvent vape shop and complies with all the legal demands placed on directors of insolvent businesses. A licensed insolvency practitioner administers the procedure, which allows for outstanding debts to be written off.
The liquidator values and sells your shop assets, such as fixtures and fittings and computer equipment. The proceeds from the liquidation sale are then used to provide your unsecured creditors with as high a return as possible.
CVL also benefits company directors as you may be able to claim director redundancy pay if you’re on your company’s payroll as an employee. Once the administrative element of the process is complete, the company name is removed from the register at Companies House.
Liquidating a solvent vape shop
The process that will be used to liquidate your solvent vape shop is Members’ Voluntary Liquidation (MVL). Although there’s also an informal closure method available to solvent businesses, MVL offers distinct advantages if your retained profits are around £25,000.
Distributions are taxed as capital rather than income, making this process highly tax-efficient for directors and shareholders. A further reduction in tax liability may also be available if you’re entitled to claim Business Asset Disposal Relief (BADR).
How do I dissolve my vape shop?
Company dissolution is an alternative to MVL for solvent vape shop businesses. It’s an inexpensive procedure that may be appropriate for your company if it has lower profits than £25,000.
In this case, you administer the process yourself as a director and communicate with all the necessary agencies, including Companies House and HMRC, to wind down your shop’s affairs and then close it down.
Company Closure can help you determine the best way forward if your vape shop is subject to poor cash flow or other challenging issues. We work with company directors to ensure they take the correct closure route according to their business’s situation.
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At Company Closure we have a nationwide team of licensed insolvency practitioners and company closure experts here to help you understand your options. Whether your company is solvent or insolvent, there is a closure method out there to suit you.
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