Dissolve a Limited Company With or Without Debt

1. DISSOLVE A LIMITED COMPANY WITH OR WITHOUT DEBT?

2. CLOSING DOWN A LIMITED COMPANY WITH OR WITHOUT DEBTS In most cases, voluntary dissolution usually occurs when a company is no longer required or is dormant. It is more cost-effective than liquidation and means that you don’t need to file company accounts or annual returns. However, the criteria that need to be met is strict: • The company must not have traded for at least 3 months; ceasing to trade must be for a genuine reason • The company doesn’t have any cash in the bank nor any assets or property • Any creditors, if the company has any debts, have been informed and permission has been requested from them to dissolve the company

3. HOWEVER, THERE ARE SEVERAL SITUATIONS WHERE YOU ARE NOT ALLOWED TO USE A VOLUNTARY DISSOLUTION: • The company has entered a formal insolvency procedure including a CVL, CVA, compulsory liquidation, MVL, administration, or receivership in accordance with the Insolvencies Act 1986, or any other scheme under the Companies Act 1985 • Where a winding-up petition (order) has been issued against the company by a creditor.

4. PROCESS TO DISSOLVE A COMPANY Before you start the dissolution process, make sure you have actioned the following: • Any assets have been distributed among shareholders. If not, any assets remaining after the dissolution will become the property of the Crown • Pay employees their final wages and if making staff redundant, follow the rules • Pay any outstanding NI, PAYE and corporation tax to HMRC, as well as any other tax liabilities • File your company tax return and accounts with HMRC, stating that they are the final accounts prior to dissolving the company • Request HMRC close down the company’s payroll and deregister it for VAT purposes • Confirm that the company has paid any outstanding debts or can upon dissolution

5. ADVANTAGES OF VOLUNTARY DISSOLUTION The main advantages to closing down a company with or without debts using the voluntary dissolution process are: • It is an efficient way of dissolving a dormant company from Companies House’ register • There are no liquidation costs, fees or expenses • There is no formal investigation into directors’ conduct, which is required in other forms of liquidating a company. That said, the government recently introduced the Ratings (Coronavirus) and Directors (Dissolved Companies) Bill that allows The Insolvency Service to investigate directors retrospectively as to their conduct. This is to deter directors from dissolving companies that have taken advantage of the Bounce Back Loan scheme during the pandemic.

6. DISADVANTAGES OF A VOLUNTARY DISSOLUTION However, there are also disadvantages: • Any creditors are entitled to reject your request to dissolve the company and you need their permission to proceed • Any creditor, liquidator or shareholder is entitled to revive the company at any time after dissolution for up to 20 years’ but they will need to meet criteria: • Any creditors did not receive the correct dissolution request/notice • The company was found to be trading during the 3-month consideration period prior to the application to dissolve the company • The directors were found to have committed fraud, misfeasance or another unjust action before or during the dissolution process.

7. MAILING ADDRESS Norwich NR2 1SN, United Kingdom REACH OUT EMAIL ADDRESS mail@leading.uk.com PHONE NUMBER +44 800 246 1845 WEBSITE www.leading.uk.com