You don’t always need a licensed insolvency practitioner to close your company down.
For a minimal fee in the region of £10 you can file forms at Companies House to have the company dissolved and struck off the register. You will need to transfer assets including bank balances to personal capacity before the company is struck off and your accountant will deal with the necessary tax treatment and returns.
To make sure you are choosing the right option you should always take advice (normally from your accountant) before having a company struck off.
Provided the company is solvent and there are no creditors the process is very straightforward but it is also possible to have a company struck of if it has debts. If your company has no significant assets but still owes money to creditors this may be the appropriate option for you. When you file the forms any creditors (such as HMRC) can object to the striking off. If you explain the company’s finances often the objection will be withdrawn and the company can be struck off.
If you are thinking of applying to strike off a company with debts you should always take advice from a licensed insolvency practitioner before doing so. Brailey Hicks will not charge you for the advice and it could help avoid making a mistake. Once a company has been struck off it is a costly exercise to have it restored if striking off turns out to be the wrong option.
Some of the drawbacks of striking off include:
The company’s employees will normally be entitled to claim redundancy. When an insolvent company is placed into liquidation the redundancy which can be thousands of pounds is paid to employees by the Redundancy Payments Office. Directors often don’t realise they are entitled to this also, provided they are employed by the company.
Any assets which are not transferred properly prior to the strike off will automatically transfer to the Crown (Bona Vacantia).
Striking off a company is not always the most tax efficient choice. Always talk to your accountant or tax adviser before filing forms to strike off a company. A members voluntary liquidation may be a better alternative.
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