Winding up a Limited Company

shomk

My friend started a limited company a little under a year ago, but what with the recession business has been really poor and she is considering winding up the company. She has no debts - just usual bills to pay which she can manage.

Any advise on how to go about it and the cost involved? She has been informed that a solicitor can do it but it is expensive. Can she do it herself? Thanks.

Pennywise

If it is solvent, i.e. can pay all its debts (including taxes!) then she can do it herself very simply by using the Companies House informal striking off procedure (google for "Companies House S652A").

What she has to do first, though, is to prepare her accounts for the trading period (in the full statutory format as required by Companies Acts, to include directors reports, notes, balance sheet, etc) and also the corporation tax returns. The full accounts and CT return need to be submitted to HM Revenue & Customs along with whatever corporation tax is due and a formal request for their ESC C16 (again google it for details) to apply. If she doesn't go through this procedure and get HMRC approval, they'll object to Companies House when the striking off proposal is published. Likewise, anyone else to whom the company owes money may object to Companies House.

Also worth remembering that she'll also have to file a final VAT return and apply for VAT deregistration (if VAT registered) and also contact the HMRC payroll office to do a final P35 and issue a P45 to herself etc. These HMRC offices are completely separate from the corporation tax office, so she needs to contact each separately.

Also, remember that she has to close the company bank account and buy any remaining stock/assets from the company at market value, before striking off, as otherwise all the company's remaining assets are forfeited to the Crown (including the bank account balance!).

If the company is insolvent and can't pay its debts, or there are any other complications, then she'll have to get a licensed insolvency practitioner to close it down, which can be quite costly as it is a long and drawn out process.