Closing Down Your Ltd Company

What’s the cheapest way to close down your limited company?

Today we are talking about Striking Off a Company.

This is a simple and definitely the cheapest way to close your limited company, the best part is that you can do it yourself for £10. If you’re still wondering how to close a ltd company, let’s tell you some more information.

How to close a ltd company

The cheapest way to close a ltd company is through filling out and submitting a DS01 form at Companies House. Certain conditions must be met when dissolving a company and you must not have significant debts. Using this method to close a ltd company will result in the company being taken off the register, however it must be done correctly or your company may end up reinstated and you could end up being personally liable for company debts. 

Requirements to close a ltd company:

  • You haven’t traded in 3 months
  • The company has no cash or assets
  • If you do have creditors, you have informed them and requested their permission to dissolve the company.
  • Your creditors are given 3 months to object to you striking the company off, if they don’t the company gets dissolved
  • You haven’t tried to move assets such as property, plant, and machinery out of the company.

Here is a typical example:

James’ limited company owes HMRC £8k in corporation tax, he has no way to pay it back and the company has no assets, he’s not traded for 3 months and is worried about HMRC turning up at his door. He files a DS01 form to companies house and also sends a copy of the DS01 form to HMRC. He also sends a covering letter informing them that the company has no assets or cash and inviting them to liquidate the company if they wish. At this level it’s highly likely HMRC will not respond within 3 months and the company will be struck off the register. The debt to HMRC will dissolve also as the company no longer exists.

There are disadvantages to this idea:

  • The companies that you owe money to may object
  • The company could be reinstated for up to 20 years.
  • This process is open to abuse if done incorrectly your company could be reinstated and you being made personally liable for the company debts
  • It’s highly unlikely that you will be able to dissolve a company and not pay your bounce-back loan

If you choose to dissolve a company you will not be able to make a claim for redundancy, the average claim for directors is £9,000 so check this with me before you make a decision. If you’re still wondering how to close your ltd company, our expert team are here to help. Any questions please let me know.

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I'm Chris Worden, Managing Director at 1st Business Rescue. With over 7 years of experience, I help UK directors navigate the complex world of UK corporate insolvency. We offer free and independent advice to UK directors and advise them about what options may be available to them if their limited company starts to struggle. I am passionate about helping other directors overcome their business challenges and get back on their feet, as I was once in the same position as them. I had a business that became insolvent, and the advice out there was confusing and overwhelming. I am here to provide honest and valuable advice to UK directors.  I am proud to say that we are one of the only 5-star corporate insolvency companies on Trustpilot with hundreds of 5-star reviews, and we publish videos weekly on our YouTube channel. Our channel is designed to educate UK directors about insolvency and debt advice. Check it out here:

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On March 22, 2021   /   Useful Information