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Free impartial start-up advice From pcg.org.uk, the association supporting freelance contractors |
How to shut down your contractor limited company
Posted May 5, 2009
In this article, we look at the processes involved in closing down your limited company for good.
If you have decided to cease using your contractor limited company, rather than making it dormant for a period of time, you need to follow the following steps to complete the process.
Assuming the company is able to meet any outstanding debts, once you've decided to close the company, you should not run any further transactions through the company aside from those related to closing the company.
1. If your company has any creditors, or other shareholders, you will need to warn them in advance as in case any of them object to the company being struck off.
2. You will need to settle any outstanding debts you may have.
3. Assuming you are VAT registered, you need to cancel your VAT registration with HMRC (Form VAT 7 (PDF)
4. A final payroll will be run for you and any other staff you employ, who will all be issued with P45s. The company will also be required to submit a final employer annual return (P35) to HMRC.
5. Final accounts should be prepared and submitted to Companies House. This step might take place a few months after trading has ceased, to allow for any final reconciliation / expenses to be accommodated.
6. You must settled your final Corporation Tax bill. You have 9 months to do this, however the company cannot be shut down until all tax liabilities have been settled.
7. Any money left in the company, after all expenses and tax liabilities have been settled, should be distributed to shareholders.
8. 3 months after the business has ceased trading, you can apply to Companies House to have the company struck off. You will need to submit Form 652a (PDF) (Application for striking off) for this purpose, and pay a £10 fee.
You should also refer to this Companies House guide to striking off a company, and ideally your contractor accountant should guide you through the entire striking off process.
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