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Company Closures

STREAMLINE CLOSURE

secure transition

Closing your Limited company is more complex than closing the bank account and walking away; certain formalities must be followed.

To close a company, you must either go through liquidation or a simple strike off of the company. To determine which route is right for you, we need to consider the total value of your assets and funds at your cessation date.

The strike-off process

If the total value of assets and funds to be distributed is less than £25,000, you can close your company via a simple strike-off. The amounts distributed will be treated as capital gains, and entrepreneurs’ relief may be available.

Companion Accountancy will prepare cessation accounts for your company and ensure you complete all final returns and deregister for all relevant taxes. We will report the distribution of assets and funds on your self-assessment tax return and ensure the company is struck off from the Companies House register.

This whole process can take between 3 and 6 months to complete, depending on how quickly your books and records are updated and documents are returned to us.

MEMBERS VOLUNTARY LIQUIDATION

Ensuring solid arrangements for your business

If your company has assets and funds in excess of £25,000, you will need to follow a more formal liquidation route (an MVL), and an Insolvency Practitioner must oversee this. Companion Accountancy is not a registered Insolvency Practitioner, but we have an established relationship with Opus Business Services Group, which is registered to oversee such liquidations. We work closely with them to prepare your cessation and liquidation accounts. We’ll also complete your final self-assessment once the liquidation is complete.

Higher costs are involved with an MVL, but these are usually more than exceeded by the tax savings available on your final distribution. If the value of your assets and funds are marginally higher than £25,000, we can advise you on whether the tax savings from an MVL will exceed the fee required to take this option. Companion Accountancy can work with you to make alternative, more tax-efficient plans if it does not make financial sense.

Assuming your income in the year has already or will exceed the higher rate threshold, we calculate
that for any distributions over £36,000, the appointment of a liquidator is likely to yield the highest
return after having paid all taxes and professional fees. It assumes that Entrepreneur’s Relief is
available on the Capital gain.

We have worked closely with Opus Business Services Group for some time. Whatever your circumstances, they can help. If you want to talk to Opus about your situation, please ask your accountant to introduce you. An initial chat to see what your options are is free of charge. 

It depends on the optimal route for your circumstances. Our table below sets out the most common scenarios.

The allocation of shares is normally done when the company is formed; check that the shareholder(s) are as you want and that the company is owned in the proportion you requested. Remember, dividends are paid to shareholders in proportion to their shareholdings. Further shares can be issued and allocated later on if your circumstances change.

 

COMPANY STRIKE OFF – NO CHARGEABLE GAIN

  

FORMAL LIQUIDATION
 

Minimal reserves, under the Capital Gains Tax Annual Allowance

Reserves under £25,000 – ESCO 2012 route

Reserves over £25,000 – liquidator required
 

From £300 plus VAT

From £500 plus VAT

From £3,320 plus VAT and disbursements

Undertake tax planning including considering the utilisation of
the annual Capital Gains Tax Allowance and Entrepreneurs
relief

X

Y

Y

Preparation and filing of final VAT Return

Y

Y

Y

Reconcile and close down VAT account – ensure taxes paid or
refunds requested

Y

Y

Y

Prepare and file final payroll RTI submission

Y

Y

Y

Issue P45

Y

Y

Y

Reconcile and close down PAYE account – ensure taxes paid or
refunds requested

Y

Y

Y

Amend company year-end where necessary

Y

Y

Y

Preparation of cessation accounts for approval

Y

Y

Y

Filing of cessation accounts with Companies House and
HMRC

Y

Y

Y

File final company CT600 with HMRC

Y

Y

Y

File DS01 with Companies House requesting strike off

Y

Y

Y

Prepare pre liquidation accounts and pass to the
liquidator

X

X

Y

Liaise with the liquidator to complete liquidation
formalities

X

X

Y

Opus complete the formal Liquidation process

X

X

Y

Prepare final Self Assessment return and report capital
gain

Additional charge £150 plus VAT

Y

Y

Suppose your company is insolvent, and you cannot meet your tax liabilities or repay a director’s loan. In that case, you will need bespoke advice from our insolvency partner—creditors Liquidation from £4,000 plus VAT. Please call one of our accountants on 01296 468 185 or email [email protected] for more information.

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