How to Close a Company

We have set out examples below of when each of these processes might be most appropriate but as with all Insolvency processes, to properly decide which is right for your Company you will need to speak to an Insolvency Practitioner who will be able to advise you based on your individual circumstances.

If you are looking to close your Company for a genuine reason and realise the maximum value for its assets in the most tax efficient manner then you should always consider putting the Company into Members’ Voluntary Liquidation.

As well as the basic tax benefit of taking funds out as distributions of capital rather than dividends, MVL also allows you to claim, if the requirements are met, Business Asset Disposal Relief which can mean paying as little as 10% tax on up to £1million of distributions, which is rising to 14% from 6 April 2025.

You can find out more about Members’ Voluntary Liquidation here.

In a CVL, the job of the Liquidator is to sell the Company’s assets for as much as possible. In most instances, the assets are of most value to the Director as they have the working knowledge of the business ‘in situ’ and can take them forward. The Director is therefore able to buy the assets back from the liquidation if their offer is the best. For the purposes of the CVL, the assets would be valued by an Agent to ensure creditors have reassurance that market value has been obtained.

If the Company does not have any assets but you still want to place it into Creditors’ Voluntary Liquidation, then it will fall to the Directors to pay for the Liquidation.  If you are in this situation, then we will always agree a fixed fee with you in advance, and if appropriate, will agree staged payments with you.

You can find out more about Creditors’ Voluntary Liquidation here.

If you have ceased to trade and have no assets and no debts then you may be able to dissolve your Company without the need for an Insolvency Practitioner.  This is also called striking off and is done through Companies House.

In order to dissolve your Company, it needs to meet a number of specific criteria including:

• It hasn’t traded or sold off any stock in the last 3 months;
• It hasn’t changed names in the last 3 months;
• It isn’t threatened with liquidation;
• It has no agreements with creditors.

You can find more information on dissolution through the Government website here.

If you allow your Company to close through Compulsory Liquidation you will not have any input into which Liquidator is appointed, compared to a CVL where you nominate a liquidator for the creditors’ approval.  This process is predominantly for creditors to close companies that are not taking voluntary action and the law has designed a CVL as the more appropriate route for Directors to close their own indebted companies.  As such, you should always consider Creditors’ Voluntary Liquidation before allowing your Company to be placed into Compulsory Liquidation.

You can find out more about Compulsory Liquidation and what to expect at your interview with the Official Receiver here.

When you get in touch with us, you will speak directly to a licensed Insolvency Practitioner from the outset.  We will take the time to understand your Company’s financial position, what your future intentions are for the business and ultimately what outcome you are hoping for.

If you are considering closing your Company and are unsure of how to proceed or would like to discuss any of the available procedures, please call us to discuss your options in more detail.