Can I close a company myself?

Author
Shaun Barton | Company Closure Expert

Last Updated:

Can I close a company myself?

It is possible to close a limited company yourself, but initially, you need to consider the company’s financial position. If it has the money to repay all of its creditors you can voluntarily strike it off the register at Companies House.

It’s important to be certain that your company is solvent before taking this route, however. If you’re mistaken and the company cannot afford to pay its creditors, the consequences of trying to close the business yourself can be serious.

Considerations when you want to close your own company

You could face accusations of misconduct if the business is later found to be insolvent. When the notice is placed in the Gazette advertising your intentions to close down, a creditor may become aware, and formally object.

An additional factor to consider is the potential existence of contingent liabilities. These can sometimes tip a business into insolvency unexpectedly – if a claim against the company is upheld in court, for example.

The potential ramifications of falling foul of the strict UK insolvency laws include disqualification as a director for up to 15 years and personal liability for the business’s debts.

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How to close a solvent company yourself

The voluntary strike off process involves gradually winding down your company’s affairs over several months. Apart from the requirement for solvency, to be eligible for voluntary strike off your company must not have:

Traded or sold off any stock for three months
Changed its name during the previous three months
Entered into any formal agreement with creditors, such as a Company Voluntary Arrangement (CVA)

Form DS01 is used to dissolve your company – you can complete the form online and submit it to Companies House along with the £8 fee. A copy should be sent to any directors who haven’t signed the form, and also to creditors, employees, and shareholders.

Companies House place a notice in the Gazette announcing your intentions to close down. If no objections are made, the company name is removed from the register and your business ceases to exist.

So are there any other considerations before striking your company off?

Need to speak to someone?

With multiple offices across the UK and a vastly experienced team of business closure experts, you are never far away from the advice you need. Our Licensed insolvency practitioners provide free consultations to all directors and shareholders, and can quickly ascertain which closure method is best for your business.

We are licensed by recognised professional bodies and have helped thousands of directors over many years. Contact us today for your free company closure consultation.

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Members’ Voluntary Liquidation may be a better option

Although you cannot actually close the company yourself using Members’ Voluntary Liquidation, if the company has retained profits of £25,000 or more you can instigate the process by appointing a licensed insolvency practitioner.

MVL is a tax-efficient option as distributions are taxed as capital rather than income. Asset Disposal Relief, formerly known as Entrepreneurs’ Relief, can further lower your tax liability to 10 per cent if you’re eligible to claim.

Members’ Voluntary Liquidation may also be a good option if your company’s affairs are complex. This is because the process is conducted by a licensed IP and you have the reassurance that your affairs are being dealt with professionally.

The MVL procedure involves repaying all your creditors, selling or distributing the business’s assets, and apportioning the profits amongst members. Once this process has been completed the company is removed from the Companies House register.

What happens if your company is insolvent, however? Can you still close it yourself?

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Can you close your own insolvent company?

You can’t close an insolvent company yourself as you have to appoint a licensed insolvency practitioner and follow an official procedure. This is called Creditors’ Voluntary Liquidation (CVL) and it involves selling your business assets at auction.

The proceeds are distributed according to a statutory hierarchy of creditors and debts that remain are written off. A notable benefit of entering CVL, for yourself as a director, is the possibility that you could claim redundancy pay, which could help to fund the process.

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Seeking professional guidance

Closing down a limited company isn’t always straightforward, and needs careful thought before deciding on the most appropriate method. For example, it’s highly recommended that you’re certain of your business’s official financial status so that you know you’re taking the correct route.

Company Closure can provide tailored advice on closing your company according to its circumstances. We operate an extensive network of offices around the country and offer free, same-day consultations.