How to shut down a company

Closing down a company

Entrepreneurs are risk takers, and sometimes things don’t work out as planned. When thinking about how to shut down a company, there are three main routes available. Note that you may need assistant from specialist accountants for all 3 routes available.

Dormant company

An alternative to closing the company is to leave it dormant, providing it is not carrying on business activity, trading or receiving income. The company will remain registered at Companies House and you will need to send an annual return and accounts each year.

Strike off

If you have not traded in the last three months and are not threatened with liquidation then you can apply to ‘strike off’ your company from the Companies House register. The DS01 form must be completed, a copy of which must be sent to shareholders, directors, creditors, employees and pension fund trustees. Existing employees must be paid their final salary and treated in accordance with prevailing redundancy rules. A request to shut down the company payroll scheme must be made to HMRC and business assets must be allocated to the shareholders (or risk losing them to the crown). Finally, the last accounts and tax returns must be sent to HMRC.

Companies House will publish your request to be struck off in The Gazette, the UK official public record. If nobody objects within three months then the company will be struck off the register.

Wind up

Alternatively, a solvent company may enter members’ voluntary liquidation. You must complete a declaration of solvency signed by a majority of directors. At least five weeks later the company must pass a resolution for voluntary winding up, which should also be advertised in The Gazette. The resolution must be sent to Companies House within 15 days of the resolution. Finally, you must appoint an authorised insolvency practitioner as a liquidator who will take charge of winding up the company.

Find out more winding up your business if it is insolvent or has outstanding debts.