Company closures
Closing your Limited company is not as simple as closing the bank account and walking away; certain formalities need to be followed.
To close a company, you must either go through liquidation or a simple strike off of the company. In order to determine which route is right for you, we need to take into consideration 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 then you can close your company down via a simple strike off. The amounts distributed will be treated as a Capital Gain and Entrepreneurs Relief may be available.
Orange Genie Accountancy will prepare cessation accounts for your company and will ensure that 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 make sure that 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 up to date and documents are returned to us.
Members Voluntary Liquidation
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 this must be overseen by an Insolvency Practitioner. Orange Genie Accountancy is not a registered Insolvency Practitioner but we have an established relationship with Opus Business Services Group, which are 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.
There are higher costs 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 on whether the tax saving from an MVL will exceed the fee required to take this option. If it does not make financial sense, Orange Genie Accountancy can work with you to make alternative, more tax-efficient plans.
Assuming your income in the year has already or will exceed the higher rate threshold, we calculate that for any distributions in excess of £36,000 the appointment of a liquidator is likely to yield the highest return, after having paid all taxes and professional fees. This assumes that Entrepreneur’s Relief is available on the Capital gain.
If you need a liquidator
We have worked closely with Opus Business Services Group for some time. Whatever your circumstances they can help. If you would like 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.
What does it cost to close your company?
It depends on the optimal route for your circumstances. Our table below sets out the most common scenarios.
If none of these quite fit your needs, we are happy to discuss individual circumstances to suit.
Solvent Liquidations
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 £250 plus VAT | From £500 plus VAT | From £2,500 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 |
Insolvent liquidations
If your company is insolvent and you are unable to meet your tax liabilities or repay a director's loan 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 info@orangegenie.com for more information.
