How to Close Your Limited Company
We sometimes hear from clients who want to cease trading and request to close their limited company . Where the limited company does not have any debts, other than money owed to company directors, it is fairly straight forward to close the limited company.
The dissolution method known as “voluntary strike off” can be followed and the directors simply need to follow the Companies House prescribed process. The company directors will need to complete and sign form DS01 which can be downloaded here.
Once complete the form must be posted to Companies House at the address provided and a cheque for £10 will need to be enclosed. This is an admin fee levied by Companies House for the strike off of a limited company.
You must ensure that you have taken the following steps prior to applying for voluntary strike off:
1) The company has ceased trading and has not traded in the last three months;
2) You have informed HMRC as they will expect a final set of accounts and for any tax to be settled – although if you do close your limited company before submitting your final corporation tax return it is likely that HMRC will not ask for payment as the company has been dissolved;
3) All creditors must be informed prior to your application for voluntary strike off.
Finally, don’t forget to close your business bank account before the company is struck off. If you don’t the bank account will be frozen and any remaining balance will be lost to the Crown.
The list below sets out the main reasons why your client would need to fill in a tax return:
They were self-employed for any part of the tax year.
Partner in a business partnership
They were a partner in a business partnership for any part of the tax year.
They were a company director (unless this was a non-profit organisation and they didn’t receive payments or benefits).
Savings and investment income
They received £10,000 or more in the tax year.
They received £2,500 or more in the tax year.
Income from Property
They received income from property during the tax year of £10,000 or more (before deducting allowable expenses) or £2,500 or more (after deducting allowable expenses).
Foreign income that is liable to UK tax:
They received any foreign income that’s liable to UK tax.
Employment and wish to claim expenses or professional subscriptions
They were employed or a director. They have expenses or professional subscriptions of £2,500 or more to claim
They received income from all sources in the tax year of £100,000 or more.
Bankruptcy / Sequestration / Individual Voluntary Arrangement
They may need to fill in a tax return for the year in which they were declared bankrupt, sequestrated or entered into a voluntary arrangement.
High Income Child Benefit Charge
If your client’s income is more than £50,000 and your client or their partner received Child Benefit, they may need to fill in a tax return.
Licenced Accountant in Brighton