The quick answer
Typically, the total cost of closing a limited company that is insolvent is £5,000 plus vat. This is only an approximate guide. If the company is solvent then it will usually be cheaper and cost from £1,500 upwards as it is simpler to deal with.
We can give an exact quote and the exact cost will depend on the financial situation of the company, the number of shareholders or creditors involved and the value of assets owned.
In more detail
There are two scenarios for closing a limited company. These are:
- When all liabilities (creditors) can be paid in full. This is a solvent liquidation.
- When they cannot be paid in full. This is an insolvent liquidation.
Where everyone can be paid in full
If all liabilities can be paid in full and there are surplus funds to be returned to shareholders then the company can be closed by a Member’s Voluntary Liquidation. This is providing that all necessary obligations for an MVL have been met and the company has assets totalling over £25,000. Costs for closing a company in this way start from about £1,500 plus vat upwards.
If there are no assets or liabilities then a company that is dormant can just be struck off for a fee of £10 paid to Companies House on completion of form DS01 (obtainable online from Companies House).
Not enough left to pay everyone in full
If all liabilities cannot be paid in full such as tax bills or perhaps redundancy costs then the usual method of closure is a Creditors Voluntary Liquidation, also known as a CVL. The cost varies depending on the size of the company but typically the cost is £5,000 plus vat to put a company into liquidation.
If there are not enough funds left to pay the costs of a liquidation then the company can be left in a very difficult situation. It can still be pursued by creditors who are demanding payment or Companies House who are chasing to have annual documents filed. Vat and PAYE returns are still due.
In this case it may be worth the directors paying the funds personally to have the company liquidated.
If you are worried about the cost of closing your limited company we can quote a fixed fee to do this. Liquidation is one of the cleanest ways to close a company.