It is possible to wind up your own company, and directors sometimes do so via Form DS01, which is sent to Companies House. The process is called voluntary dissolution and involves various steps, including repaying creditors, and requesting that the company name is removed from the official register at Companies House.
There are many factors that can render it inappropriate, however. The main issue is that it’s only suitable for solvent businesses, but even if your business is solvent, another method may be more appropriate.
This is called Members’ Voluntary Liquidation (MVL) – a tax‐efficient procedure that, if conditions are right, could significantly lower your tax liability.
MVL involves appointing a licensed insolvency practitioner (IP) so you wouldn’t be winding up your own company, but it’s hugely beneficial to seek advice from a licensed IP in either case.
UK Liquidators are MVL specialists and can provide the trustworthy advice you need if you’re considering winding up your own company.
Voluntary dissolution is an inexpensive way to wind up your company, and costs only £10. If the company’s financial situation makes it unsuitable for dissolution, however, the cost to you can be far higher in other ways.
If the company has outstanding debts, there’s a considerable risk that creditors will object to the application for dissolution. Even if an application goes through, creditors can apply to have the company reinstated to the register at any future point.
This could trigger an investigation by the Insolvency Service into your actions, as voluntary dissolution, or strike‐off as it’s also known, is only available for companies with no debt. So what is the alternative route when you want to close down your own insolvent company?
Company directors have some control over the CVL process – you can choose your own liquidator, and also decide when to place your company into liquidation. Creditors’ Voluntary Liquidation ensures you fulfil your legal duties as the director of an insolvent company, which involve placing your creditors’ interests first.
Trying to wind up your own insolvent company via voluntary dissolution, on the other hand, suggests you’re attempting to avoid paying creditors. This could lead to serious repercussions, such as personal liability for the company’s debts.
When a company is insolvent it’s vital to seek professional assistance, and although CVL incurs professional fees, it helps you minimise the likelihood of misconduct or wrongful trading allegations.
Another key issue regarding winding up your own business via voluntary dissolution is that it prevents you from claiming director redundancy. Average claims for director redundancy currently stand at £9,000, so it’s important to take this into account.
Directors who have also worked as employee for their company may be eligible for a redundancy payout, but also statutory payments, such as arrears of salary and unpaid holiday pay.
UK Liquidators can put you in touch with a reliable claims management firm specialising in director redundancy, so you can establish your entitlement. Our partner‐led team has extensive experience of helping directors place their business into voluntary liquidation, and can provide further guidance based on your own situation.
If you’re considering how to wind up your own company, please get in touch with us to arrange a free, same‐day consultation. We can explain the procedures available, present your best options, and ensure you take the correct course of action.
If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.
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If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.
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