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In the UK it is remarkably easy and cheap to form a limited company. For less than £100, perhaps even less than £50, you can have a company formed in a matter of hours. This compares to the situation in many other EC countries where the costs can run into thousands and it can take weeks, if not months, to get a company registered.

But, if your business has come to the end of its life, either because you can’t rescue it or because you no longer want to keep it going, you will find that closing down a UK company can be far from simple.

Liquidation

The normal way to close down a company is by starting a process called “liquidation” or “winding up”. This is a legal process in which a liquidator is appointed to wind up the affairs of a company and at the end of the process the company ceases to exist. This process does not mean that all the creditors (those to whom the company owes money) will get paid.

There are basically three different types of liquidation:

  • Members’ Voluntary Liquidation: this is when the members (shareholders) of a company decide to put it into liquidation and there are enough assets to pay all the debts of the company. The members appoint and pay a liquidator themselves (or out of the assets of the company).
  • Creditors’ Voluntary Liquidation: this is when the shareholders decide to put the company into liquidation but there are not enough assets to pay all the debts of the company. The creditors appoint and pay a liquidator themselves (or out of the assets of the company if it has any).
  • Compulsory Liquidation: this is when a court makes a “winding-up” order for the company to be wound up, usually on the petition of someone who is owed money by the company, although the directors may also apply for a winding up order, usually because neither they nor the shareholders are able or willing to pay the fees – which can be high – for a voluntary liquidation. The court appoints and pays for a liquidator but can recover all or some of that from the sale of any assets.

If your company is unable to pay its debts it is said to be insolvent and should cease trading or the directors may become liable for the debts. If you suspect that the company is insolvent you must take professional advice and may need to liquidate the company, although it may be possible for licensed insolvency practitioner or a specialist business rescue advisor to negotiate arrangements with those to whom money is owed to keep the business trading. Note that being unable to repay shareholders does not make a company insolvent. They knew when they invested they could lose their money and are at the very bottom of the list of creditors who would only get paid after everyone else had been paid 100%.

So, take appropriate advice. However, there is an alternative to liquidation which I want to discuss next.

Dissolution

This is a simpler and cheaper method and is ideal for closing down companies which have no debts. However it can sometimes be used to close down companies which are insolvent – though this cannot be guaranteed.
In a typical case of a solvent company the steps would be as follows:

  1. The company should cease trading and carry out no further transactions, except those which are necessary to wind it up.
  2. Anyone that the company owes money to should be paid; otherwise they may object to the company being dissolved in this way. The company bank account should not be emptied or closed until all company debts have been paid. Any loans to or from any company directors or shareholders should be repaid.
  3. If any vehicles or equipment have been bought on any form of hire purchase, leasing or finance agreement, then the finance company should be contacted to establish the options for ending the agreement early.
  4. The company must apply to HM Revenue & Customs to (HMRC) have its VAT registration cancelled, using form “VAT 7” A final VAT return will need to be completed, and there may be a VAT payment due.
  5. If the company employs staff they should be issued notice and a final payroll run for them (bearing in mind that they may have redundancy payments due to them) and P45s issued. At some point the company will need to make a final P35 return of payroll information to HMRC.
  6. Any of the directors and the company secretary may wish to resign, though at least one director should remain in place to deal with the closure. Remaining as an unpaid director of the company should not affect their own personal taxes in any way.
  7. A final set of accounts will need to be prepared, and submitted to HMRC. However this is unlikely to be possible immediately after the company stops trading as there will be further expenses so a letter should be sent to the tax office informing them that the company has stopped trading, has no further taxable income, and will apply for dissolution in due course. Mention that final accounts will be forwarded in due course. If you do not do this then HMRC may object to the company being closed down.
  8. Any corporation tax should be paid from the company bank account. The company generally has 9 months from the close of business to pay this tax, but the company cannot be closed down until it is paid.
  9. Any money or equipment left in the company after all these expenses have been met should be paid out to the shareholders in proportion to their shareholdings. It may be worthwhile for the company to apply to HMRC to have such payments treated under Extra Statutory Concession C16. This treats all such final payments as capital gains instead of dividends and may result in less tax being due.

Once 3 months have passed since the business ceased trading the directors (or a majority of them) can make an application to Companies House to have the company struck off. You can get full details of how to do this from the Companies House website. There is a £10 fee and you can download all the forms free of charge.

If the company is insolvent then it still may be possible to use this process, however to do so you will need to get approval from all those to whom the company owes money by writing to them with a notice of intention to have the company dissolved. You have to confirm you have done this before Companies House will process the dissolution and if it later is proven that you didn’t write to everyone you could be guilty of perjury.

You probably will need advice on what to say in the letter but in general you need to explain that the company is insolvent, cannot pay its bills, and cannot continue to trade. Tell them that the directors want to dissolve the company but that if creditors object the company will have to go into liquidation and as there are no funds to pay for a voluntary liquidation one of them will have to petition the courts at their own cost.

Be aware however that even if trade creditors don’t object it is possible that HMRC will object if substantial sums of tax (Corporation, PAYE/NI or VAT) are due unless they can agree a repayment schedule with the shareholders or directors taking on personal liability. In this case, get professional advice before signing anything.

353 Responses to “How To Close Down Your Limited Company”

  1. paul says:

    hi james, yes it seems as straight forward as this however certain factors were out of my control. The service i offer was passed to a third party and the paperwork issued to the customer suggests if they cannot carry out the works an admin fee will be charged but the remainder refunded. i tried to contact companies house to ask advice. i have until december to resolve this before the customers start chasing up again. i need help

  2. paul says:

    hi there, i set a company up in april 2011. i took 2 cheques payable to the company totalling £1150.00 and 2 cash payments totalling £1000 which were not deposited to the company but receipts were issued . I have not registered for VAT as i didnt know how much the company would turn over. as it happens i went away for a few months for family problems and returned in september 2011. I did not provide the service paid for however due to costs etc website/telephone/ admin etc i cannot pay this money back. i have since taken only £1,650 more in transactions and wish to close the company down. i have experienced stress and depression caused by the debt. i have contacted debtline and they have advised to call business debt but they never answer.

    I had not appointed an accountant for the company as yet. Other than these 6 creditors the company has no further debts.

    Am i liable for VAT ? £2,800 in total income in 6 months. How can i close the company so that these people stop chasing me. I have no assets and nothing in the bank.
    Please help.

    cheers Paul

  3. Dee says:

    I have a small limited company.I was a leaseholder of a pub which has become insolvent over the past year. I have debts in the region of £10,000 mainly being my comapny overdraft, company credit card company business loan. I have my VAT and PAYE up to date. However, my accountant will be looking for £1400 to process last years accounts and a further £1400 to process this years accounts for companies house. Now, as I have not made any profit, I know I will not have to make any payment for Corporation tax, however, I do not have the money to pay the accountant to finalise these accounts to send to companies house. I would like to dissolve the company. Any advise on what steps to take would be appreciated.

  4. Sylvia says:

    Hi
    we have had a ltd company for the last 5 years and it that time run up debts of 60k the majority being HMRC, we have injected all our money into this business even a 50k inheritance this year to try and rescue it, unfortunately it is not enough and we are at rock bottom, we have no money to liquidate, and was thinking of opening another company to start from scratch, where do we stand if we allow the HMRC to wind us up and we have just opened another company to relieve ourselves of all the history of debt which we cant seem to recover from.

  5. James Green says:

    So, Paul, you have accepted money from customers for goods or services which you haven’t supplied and you have spent their money. Have you heard the term “fraudulant trading”? You need professional legal advice if you are to avoid criminal action. Let me know if you need pointing to an advisor.

  6. James Green says:

    Big V – If you read through this article and some of the comments you will see that it is possible – and legal – to close down your company in this way but only if you advise all your creditors – including HMRC – and they don’t object. If you don’t tell them then at some point you are likley to end up in court on a criminal charge because part of the £10 striking off process is you signing to say that you have and if you have not then that is a criminal offence. You would be personally liable for the debts plus face a fine and/or jail time.

  7. James Green says:

    Chris – It does rather seem that your business is insolvent. You need to speak to a specialist advisor. If you send me a private email with your details I will see if I can arrange a free phone consultation for you.

  8. James Green says:

    Paul- You will need to speak to your landlord. It is likely that you and your partner (as directors and/or owners) will be liable for the lease even if you close down the company. I can put you in touch with professional advisors but you will need to pay them a fee although an initial free telephone conversation could probably be agreed. Send me a private email if this is of interest.

  9. Paul says:

    Hi there, Opened a ltd company up back in april 2011 and have paid in £2100 into the lloyds business account in that time. Due to bad finances etc I feel it is necessary to close the business down but I don’t have any money at all to do so. I did not register for vat and have not made any profit nor paid any tax.

    Can you advise what I need to do. The money paid into the account needs paying back to the customers but I do not have the funds to pay this.

    Cheers

  10. big v says:

    I owned a bar and have decided to close it down i couldnt afford to pay the bills including hmrc ,and utilities. i have since tried to get some advice on whether to go down liquidation or other means. i have been told today that for £10 i can walk away after 3 months of not trading or using the bank account is this true and more to the point legal. my company is limited

  11. Chris says:

    Hi,

    I have been operating a LTD company for nearly 2 years now and business started to pick up to the extent that I expanded into HK and India. Althought the HK office is in a dormant state currently as no business was ever trading through HK I understand my role in supplying accounts over there.
    My UK office I am slowly closing down. I have not yet informed HMRC but wanted to understand a few things.
    Firstly, I have a couple of customers in ASIA and India who I owe money to but cannot afford to repay them due to cancelled orders from the customers. I also have some expensive parts stuck in customs and if they decide to seize them for whatever reason I will then not be able to pay my supplier for these parts.
    I have VAT owed back to me which I should get shortly as this will be used to repay back the short term bank loan I got from HSBC.
    So once the loan is paid there will be customer and supplier debts but also no income due to a huge slow down in the economy.
    What are my options? Do I close the company making it insolvent?
    I have no new business for 1 month now and cannot sustain running it at a loss. I am also attending interviews to go back into FT PAYE.

    Any advise will be most welcome.

  12. paul says:

    hi,
    my partner and i have a small ltd company, we would like to dissolve the company as we have hit financial problems although at the moment we are still just solvent but it is unlikely that we will be able to pay our next rent in full. we have no debts but we are 8 months into a 5 year lease on new premises. our landlords are holding a rent deposit equivalent to 2 months rent. will we be allowed to dissolve the company in these circumstances and what will happen in the case of the lease?

  13. James Green says:

    Well Pat, the situation is that if a company has been trading whilst insolvent then it is possible for the director or directors to be held liable for the company debts. The legal definition of trading whilst insolvent is if the company cannot pay its bills as they fall due then it is insolvent. However, it isn’t as simple as that because if the directors feel that the company will soon be able to pay its bills – perhaps because a customer owes them money or they are going to get a new contract, or just that they are negotiating with the bank – then they can keep on trading. But it is a fine line. In practice the only people who can hold the directors accountable are the courts acting on the advice of a receiver or liquidator. If you are going to go down the route described above for a dissolution you will be giving HMRC the chance to object. If they don’t then they will have to write it off just as your accountant says. Only if you owe a lot of money or have seriously annoyed them are they likley to come after you.

  14. Pat says:

    Hi there,

    I have been contracting since 2006 with my own LTD company, but due to the recession I have not had much work and have got into debt. I have not been able to pay the Corporation tax due May 2011, and although I have been working during during the past couple of months I have not been able to pay the VAT bill.

    I have now got a FTC PAYE job, with possibility of going permanent.

    My accountant has advised me to cease trading and close the company, to advise the tax man that I cannot pay the tax bill as I have no monies, and that as a limited company I will not be held liable for the bills.

    However, In reading the above it seems that the tax man can still come after me?

    If anyone can advise on this matter I would be grateful

    Thanks in advance

    Pat

  15. James Green says:

    Pat, you need to find out just how the company is going to close down. It sounds as though it may be a members’ voluntary liquidation. If this is the case then there should be an accountant or lawyer dealing with everything. Find out who that is – details will be in a local newspaper or check on Companies House – and contact them to make sure they know about your claim. If it is a creditors’ liquidation (insolvent) the same will apply. If the directors/owners are just going to liquidate then they have to write and tell you this and you can object. They will not be allowed to dissolve the company until your claim is heard unless the directors take personal liability for the debt. Also when a company receives a claim it must defend it by using a solicitor or other legal professional. You should know who that is and so just write to them saying that it has come to your attention the company is to close and ask what they intend doing about your claim.

  16. Pat KENNY says:

    I have issued proceeding and made a claim against a company for duty of care breach of scheme particulars with my investment However I am told the company will close in 6 months but their assts and cash position are very healty
    However it seem it will take 12months for the claim to get to court

  17. James Green says:

    Fair enough Nicky, you are fortunate indeed. However you will still need to write to the bank telling them that the company has no money and that your propose to apply for it to be dissolved as you cannot afford to put it into liquidation. If the bank objects point out that their only option would be to take court action – at their cost – to wind the company up. They would just be throwing good money after bad if they did that.

  18. Nicky Gee says:

    James I have not had to guarantee anything with the bank. I have checked through my paperwork and it appears that the £3,000 gets written off.

  19. James Green says:

    Well Nicky, your main problem will probably be the £3,000 owing to the bank as you will probably have had to guarantee that. Claim back the VAT then go through the process as described in this post to dissolve the company.

  20. James Green says:

    Dave, I don’t see why your friend is liable for any corporation tax. If he held shares in the company and has paid for them then there is nothing that HMRC can do to claim from him. You say he was the Company Secretary and again here I can’t see how HMRC can have a claim against him. If he was a director – and you don’t indicate that he was – then it may be possible that there is a claim but the only people who could take action would be the liquidator or the official receiver. A call to HMRC should be enough but perhaps he should get a lawyer or accountant to do this – or ask Citizens Advice to help him.

  21. Nicky Gee says:

    I am in the first year if trading as a LTD company, it looks like I wont make any sales and out of my own pocket I have lost some money. I have about £3,000 owing to the bank in overdraft. What is the situation on closing the business down? I will probably have some VAT to claim back (if i can for asset purchases). Will these assets need to be liquidised? As their net value is negligable? Also, i am still in full time paye employment and set this business up as a side line. What is the general cost of clsoing the business down?

  22. dave says:

    hi my friend was involved with a small none vat registered co he was secretery but the director resigned after moving overnight and my friend suffered stress and simply did not know what to do years later the corporation yax people are sending letters fo his addredd he moved back into with huge estemated corporation tax bills mounting and he checked and was told the company was not struck he was told it would be he is not coping well and has simple returned the tax bills saying not at this address but they keep sending them he has depression and now cant cope he is not able to think straight crying all the time he gets a letter and is worried they may take his house can anyone help he has no way to pay anything other that the house he ownes

  23. James Green says:

    That’s about it Kenny. You could even ask HMRC if they want you to send final accounts. Certainly if the company has had no income in the last couple of years they may agree that they don’t need accounts. Point out that you jave been asked to pay £200 + VAT for what will be in reality doemant company accounts and see what they say. You don’t need to wait 3 months if the company has been dormant for all this time but I’d wait until you get a reply from HMRC.

  24. Kenny says:

    Hi there,

    I started contracting in 2008 to 2009 therefore I setup my own LTD company, I’d assumed I would remain Self Employed, at that time the economy start to dip, after the 1st year I managed to secure a FT perm PAYE job.

    I advised my accountants and they place the company on a dormant state, but still return TAX returns and file copies to Company House etc.

    It’s been 2 years since the company been in it’s dormant state and I’m happliy in FT PAYE empolyment, I’m looking to close the company, my accountant wants to charge me £300 + vat for it and £200 +vat for final accounts !!

    Is there a simplier and cheaper way? I have read the above points under ‘Dissolution’, corrrect me if I’m wrong, in a nut shell write to HMRC, tell them I have stopped trading since 2009 and the company is dormant since then and advised them I looking to fold the company, also I have no further taxable income, and will apply for dissolution in due course. Mention that final accounts will be forwarded in due course.

    Wait 3 months then make an application to Company house to have it struck off for a smal fee.

    If anyone can help on this matter I would be grateful

    Thanks in Advance

    Kenny

  25. GILL says:

    I HAVE CLOSED MY COMPANY AS A MEMBERS VOLUNTARY LIQUIDATION BUT AN EMPLOYEE WIL HAND OVER THE COMPANY LAPTOP UNTIL ALL HER O/S NOTICE PAY,HOLIDAY PAY AND REDUNDANCY MET IS PAID TO HER FROM THE STATE.WE HAVE ENOUGH FUNDS TO COVER THIS. CAN SHE DICTATE THIS .OUR LIQUIDATOR DOES NOT WANT TO GET INVOLVED.IS IT THERE RESPONSIBILITY TO GET THIS BACK TO US OR ARE THEY WITHIN THEIR RIGHTS TO NOT GET INVOLVED.HOW SHOULD WE RESPOND TO OUR EMPLOYEE?

  26. J David says:

    My US company has a wholly owned UK Ltd subsidiary. The economic downturn has caused us considerable financial stress and it seems the logical solution is to close down the UK subsidiary. There really doesn’t seem to be any other choice and not doing this could bring down the US company too. I have less than 5 employees in the UK and, aside from a long term lease on the premises, anticipate being able to meet all financial obligations provided I can close it by the end of the year. I have read on the web and on this very useful site about redundancy procedures but I can’t find a concrete definition of how long I must consult with my employees before making the decision of whether or not to close the operation. Also, can I begin the consultation via email and if so what information must the letter include. I don’t want to put too much information into the email because I want to avoid possible wide dissemination of confidential information. Finally, I use a chartered accountant in the UK, are they the ones to contact regarding liquidation of assets and conducting all the necessary regulatory filings? I want to be sure that I protect the directors, some of which are UK based, from any future liability.

  27. James Green says:

    Lindsay, if your company is insolvent – which seems to be what you are saying – then you must stop trading or risk being made personally liable for all the debts of the company. Selling the assets to another company with which you have a connection also carries a risk unless you do it with appropriate professional advice. The danger here is that people you owe money too could claim that you sold them at a lower value than they are worth so disadvantaging them.

  28. James Green says:

    Zandile, there is no requirement for a director to be paid. Your husband can remain a director and carry out the normal duties and take part in decision making without getting paid – if he agrees of course.

  29. James Green says:

    Dave, have a read through the post which details how you can close the company down. Also I expect to finalise the publication of my new guide/toolkit next week so keep looking here and you will see when it is available. £19.95 – it will have full instructions and form letters for all possible options.

  30. Robert Moore says:

    The company will need to go into liquidation if it cannot pay its debts. As a director of a limited company you will not be personally liable unless you have traded wrongfully.

  31. Dave says:

    Hi…

    I need some advice please.

    I have a company that hasn’t started trading yet but need to basically be closed down. I am the majority shareholder, with 80% and the other shareholder has gone awol!

    There are no debts and no profits in the bank account, it’s not even VAT registered .. What can I do to simply terminate the existing of this company?

    Thanks,

    Dave

  32. Mrs Zandile Calcina says:

    l just registered a Limited Company so that me and my husband can have a wage each month since he was made redundant from his job of 6years. Both of us are Company Directors. We only have 9 employees excluding both of us. We are on a stipulated wage of £589 each per month which we can not survive on. l now have a full time job and my husband has also just got a full time job. l still manage and run the company on a day to day basis as l only work three nights in my full time job. My husband does not do much for the company but we still get the same wages per month. l feel that there should only be one paid Director for the company to trade smooth and not suffer financial loss. Do l ask him to resign as Director? We are managing to pay employees and all our bills but we could save a bit more if there was only one paid Director.

  33. Lindsay P says:

    Seeking some advice please.
    Own a small ltd company in the retail sector. Due to some issues over the last couple of years it has run up debts of about £40k which I have just came to realise the company cannot repay. However the business is still viable now that action has been take to reduce overheads provided the debt is cleared. Company has assetts worth around £1000 after its main asset, a car was recently sold to inject needed funds into the business. I am considering dissolving the company and selling the assets to a new ltd company which may or may not be in my name. Can I do this and continue to use the same trading name which is important for customers and suppliers to identify us by and is well established. Any advice would be much appreciated as I have little experience of this and little funds just now to seek proffessional advice and am just about able to keep my business going and pay my remaining staff.

  34. James Green says:

    Jo, it isn’t quite clear to me why your staff are taking you to a tribunal. If another business has gone bust owing you money and this has meant that you have had no choice but to cease trading (remembering that if you continued to trade whilst insolvent the directors – or in the case on an LLP, the “nominated members” – could be personally held liable for the debts) then it would be up to a liquidator to sort this out. If there is no money for staff then the government will make the basic minimum payment.

    If you can’t afford to pay a liquidator yourselves then either you or a creditor can petition the court to wind the LLP up and the Insolvency Service will appoint someone. Their website address is http://www.bis.gov.uk/insolvency

    You won’t be able to dissolve the LLP if there is court action (tribunal is a court) outstanding but I can’t see what you are being taken to the tribunal for anyway.

  35. Jo says:

    We were a (LLP company) concession within a large company that has appointed administrators and consequently they and us has ceased trading. They owe us ££££ and therefore we could not pay wages or redundancy pay to the employees or pay our suppliers. The ex staff are taking us to a tribunal. My problem is that we can not request to be struck off companies house until 3 months has passed and do not have money to pay for a solicitor or any professional advice. Any advice from you would be welcome.

  36. James Green says:

    Lindsay, your question raises some interesting issues. You don’t say where Company A is registered but assuming it is the UK as that’s what I was writing about, then in general you have 20 years from the date of dissolution to restore the company to the register. Other countries have shorter or longer time scales and some might not allow it at all.

    However, there is a potential problem in that when the company is dissolved then Company B actually has no shareholder. How then does it operate in respect of passing resolutions or approving actions which require shareholder consent? Depending on which US state Company B is registered in there could be massive legal problems. If Company A was removed from the register without the knowledge of the directors – perhaps for failing to complete annual returns – then there could be a defense that anyone voting in the belief that Company A was still on the register was acting legally but if you deliberately dissolve the company that would not be an acceptable excuse.

    Why do you want to close Company A? If it is a UK company then it wouldn’t cost much to keep it live as a dormant company. Alternatively you could transfer the shareholding in Company B to one of the 15 shareholders, or better still someone completely neutral, to be held in a bare trust for the benefit of all the shareholders. That wouldn’t need anything more complicated than a single page trust document you could do yourself (or pay me to draft one) certified copies of which would be given to each of the shareholders.

  37. Lindsay Cox says:

    We have a company (Company A) formed purely as a single entity (made up of 15 shareholders) that is a single shareholder in a US company (Company B).
    If we dissolve Company A, and if at some point in the future Company B does have a ‘liquidity event’ that means its shareholders can realise value in their shareholding, can Company A be revived to do so?

  38. James Green says:

    Interesting question David. I can’t see any way that the company could be dissolved or enter into a members’ voluntary liquidation. You would need to take advice from an insolvency practitioner as to at what point the directors would be able to take the decision that the company would be in danger of being unable to pay its bills when they fell due – the definition of insolvency. This could be because legal costs would so badly affect cash flow. In fact this is too complex a discussion to have here and in any event I am not a licensed insolvency practitioner – and neither would I wish to be – but I can introduce you to someone who is. Just drop me an email if you want to take this up.

  39. David Arthur says:

    David

    Hi. If a small news organisation–with limited company status–is facing libel action which could result in considerable cost, and could take years to resolve, is the organisation (or company) able to close down and, effectively, the directors to avoid the ultimate consequences on the grounds that the costs/damages will represent a business expense incurred in the course of normal day to day trading. The company would not be in a position to pay the costs/damages.

  40. James Green says:

    Hi Steve. By the sound of it your accountant is right and HMRC should just drop the matter. I am assuming that the VAT demands are being addressed to the (now dissolved) company and this being so the only party that HMRC could take legal action against is the company. If a summons arrives send it back to the Court saying that the company was legally dissolved and HMRC should have been aware of this and I’m sure the court will take appropriate action. If any baillifs turn up tell them the company was dissolved and there are no company assets in your possession.

    However, if you made the mistake of sending a personal or non company cheque for £1,300 and that bounced then HMRC could sue you (or whoever wrote the cheque) rather than the company as they could/would claim that you (or the person issuing the cheque) had taken personal responsibility for the payment. That changes things.

    A limited company protects the shareholders so that they cannot lose more money in the event of a business failure than they had paid – or were due to pay – for shares. However a director of the company, whether or not they are also a shareholder, can be held personally liable for the debts of a company if they did not carry out their duties properly. For example if they allowed the company to trade whilst insolvent.

    I hope this helps. Have a look at these posts:

    http://link4business.info/?p=71
    http://tinyurl.com/whytradelimited

  41. steve says:

    Hi everyone
    i would like some advice please..
    i had a company a few years ago, paid tax and VAT regularly.. I came to shut the company down and all seemed ok.
    After about a year i got a letter from the VAT office saying i owed them 2 payments, one was from an incorrect VAT return of a few hundred pound and one for about £1300 which i can only think was a bounced cheque.
    I had paid VAT after both of these amounts should have paid but it was never flagged or asked for and i just paid current Tax bills each quarter.
    I used a chartered accountant and he finalized my accounts and we applied to companies house who dissolved the company.
    So heres the problem, i have no bank account for the old company, i have a letter from companies house saying the company is dissolved i have no assetts from the old company yet the VAT office keep assigning solicitors to take the company to court.
    I try ask who are they taking to court? there are no directors or bank accounts but i am getting so much stress off them for a VAT bill from 2 or 3 years ago.
    Have they got a case against me? My accountant says there’s nothing to worry about and have wrote them a letter but they just ignore it and threaten me with balliffs and court… but i thought that was the reason to have a LTD company to protect me from being personally liable…
    please help…

  42. James Green says:

    Gill, given this is a members voluntary liquidation and on the assumption there are no court cases to be defended it should be a simple enough process and I can’t see why the fee levels I suggest would not cover the work you describe – so long as the company has the money to make all the payments. You really need to show an insolvency practitioner the company books and have him or her give you a quote.

  43. GILL says:

    THANKS JAMES FOR YOUR RESPONSE ON SUGGESTING A CAPPED FEE ON APPOINTING A LIQUIDATOR BUT DOES THIS FEE OF £3000-£6000 INCLUDE PAYING 6 SMALL CREDITORS OF IN TOTAL £20000 WHICH CAN BE MET BY COMPANY CASH ACCOUNT, COLLECTING ALL THE DEBTS OF £35000 IN, PAYING THE REDUNDANCIES OF 6 EMPLOYEES, PAYING THE HMRC VAT ANE PAYE- WHICH ALSO CAN ALREADY BE MET OUT OF THE COMPANY CASH ACCOUNT AND DISPOSING OF THE MACHINERY VALUED AT £300000?

  44. James Green says:

    If your husband signed a new contract then they can hold him to it. Was the contract in his name or in the name of the company? If it was in the name of the company and if there is no “personal” or “director” guarantee then the landlord can only take legal action against the company for breach of contract. It doesn’t sound as if they could come after your husband but without reviewing all the documentation I can’t advise any more than I have already.

  45. Nicola says:

    The current agreements ends at the end of August 2011 but my husband signed a new agreement in May 2011 for another 6 months starting September 2011. We have asked if we can cancel the agreement starting in September and stay on till the current one runs out in August but they have said no we have to stay until the 6 months are up in February 2012. Does it matter that the new agreement is not in force yet?

  46. James Green says:

    It sounds as if what you have is less of a lease and more of a licence to occupy. However I note the words which say that their is still the matter of fees etc “for the remainder of the period for which this agreement would have lasted if it had not ended”. Do you know how long that is for?

  47. Nicola says:

    The only clause in the Term & Conditions are on ending aggreement immediately:- To the maximum extent permitted by applicable law, the landlord may put an end to this agreement immediately by giving the client notice and without need to follow any additional procedure if the client becomes insolvent, bankrupt, goes into liquidation or becomes unable to pay its debts as they fall due, If the landlord puts and end to this agreement for any reason it does not put an end to any outstanding obligation, including additional services used and the monthly office fee for the remainder of the period for which this agreement would have lasted if it had not ended. The agreement does not say anything about limited company or directors of limited company being liable if the company folds.

  48. James Green says:

    I really wouldn’t like to give anything other than a very wide range of somewhere between £3,000 and £6,000. Once the liquidator has been appointed you have no further say in the running of the company but it is unlikley that he/she wouldn’t listen to anything you have to say. Your secretary could help but payment would come from the assets.

  49. James Green says:

    At the moment Umar the situation seems to be that your limited company owes VAT and presumably if you hadn’t received notice you would have been able to make payments and, in time, pay all that you owed. However having lost your contract and source of income you cannot do that or have any realistic hope of being able to do so in the near future. It sounds as if the company should cease trading on the basis that it is insolvent and if you do that it is unlikely that you personally will be held liable for the debts – so you wouldn’t need to go bankrupt. However if you continue to trade whilst insolvent then it would be possible for HMRC to claim that you personally should be liable for the debt. Your options are set out in the above article and also in the reply I posted to Neil on June 10th (somewhere below this answer). I am of course assuming you hav not given a personal or director’s guarantee to HMRC or anyone else. I’m just completing a DIY company dissolution pack which will show you exactly what to do and will contain template letters etc. Cost will be £19.95 and will be released before the end of this month.

  50. GILL says:

    HI THERE, WHAT WOULD BE AN AVERAGE CAPPED FEE FOR A SMALL LTD COMPANY FOR A MVL WITH MACHINERY ASSETS AND A RETURN OF CAPITAL TO THE SHAREHOLDERS WITH 6 EMPLOYEES? ONCE A LIQUIDATOR HAS BEEN APPOINTED BYMYSELF CAN I AS THE MD HAVE ANY SAY IN THE SALE OF THE ASSETS? CAN MY SECRETARY HELP TO ASSIST HIM IN THE ADMINISTRATION PAPERWORK? IE COLLECT THE DEBTS AND PAY THE CREDITORS?

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