Winding up a company, for whatever reason, can be daunting if you are unaware of the potential steps or pitfalls involved. Without specialist knowledge you may fall at the first hurdle and it is better to close or wind up the company cleanly without leaving a stack of administrative liabilities behind you. Our staff at Close a European Company can provide a full package of bespoke services according to your individual/corporate requirement as follows:
We offer the following services for dissolving/winding up a company:
- Accountancy advice
- Taxation services
- Legal advice
- Liquidation and insolvency services
- Personal Liability Advice
WHAT OPTIONS DO I HAVE FOR DISSOLVING/WINDING UP A UK COMPANY?
This is a provision in the Companies Act to allow the removal of the company from the Companies Register, typically when the company is dormant.
If the company serves no useful purpose, its dissolution removes the need for filing annual returns and accounts. But bear in mind that the company can only be dissolved (removed from the Companies House register), if the following conditions apply:
- The company has not traded for three months; this must be a genuine ceasing of trading activity.
- The company has no assets or property or cash at bank.
- The creditors must be circulated requesting their permission for the company to be dissolved under this process.
- Creditors are given three months to consider the request to dissolve the company and can reject such request.
- The company cannot have changed its name in this period.
- The company may not have disposed of any property or assets (this may include land and buildings, plant and equipment, debtors and other assets).
ADVANTAGES OF VOLUNTARY DISSOLUTION
- It is a quick and clean removal of a dormant company from the Companies House Register.
- Dissolution avoids the costs of liquidation, fees and expenses.
- It avoids formal investigation into the conduct of the directors as required in liquidation or receivership.
DISADVANTAGES OF VOLUNTARY DISSOLUTION
- Creditors may reject the application; their permission is required to proceed with dissolution.
- Any shareholder, creditor or liquidator can apply to revive the company for up to 20 years after dissolution.
- They may revive the company If the following applies:
- Notice required to creditors was not given correctly or adequately
- It comes to light that the company was trading during the three months period prior to making application to dissolve.
- It comes to light that some fraud, misfeasance or other unjust action was committed by the company or the directors before or during the dissolution process.
This is not a choice. The company is put under compulsory liquidation when a creditor has given up trying to obtain money from the company or a winding up petition is made in the public's interest. This is an expensive course of action for the creditor and serious thought must be undertaken before taking this course of action. This usually involves taking the debtor to the high court.
What happens in a compulsory liquidation?
- Creditors petition
- Advertisement of petition
- Potential "piggybacking" of debts
- Outstanding/PAYE and/or VAT to HMRC
- Company pays outstanding debts
- If debts cannot be paid then company enters a CVA, Administration or simply stops trading
- If the Crown winds up your company and if it can be proven that you traded wrongfully, took credit without reasonable prospect of repaying debts, failed to submit accounts or a number of other offences then it is possible you will face action.
- Under the Company directors Disqualification Act 1986 you could be banned as a director for up to 15 years.
- If PAYE has been abused to the betterment of the company and/or its directors gains made can be sought through the personal estate of the director
- Under the Income tax (Employment Regulations 1993 the revenue is entitled to recover unpaid PAYE from directors where proof is obtained that directors were aware of the failure to operate PAYE scheme correctly (on directors remuneration)
For both options it is important to take care to protect the assets of the business, to conform to the liquidator's wishes and to act responsibly. Please contact us for further information and advice as to how to proceed.