Typically, the total costs of closing a limited company that is insolvent is £5,000. This is only an approximate guide. If the company is solvent then it will usually be cheaper and cost from £1,500 upwards. 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.
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The Costs In More Detail
There are two scenarios for closing a limited company. These are:
- When all liabilities (we call these creditors) can be paid in full.
- When they cannot be paid in full.
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 upwards.
If there are no assets or liabilities then it 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.
If there are not enough funds left to pay the costs of a liquidation then quite often the company can be left in a very difficult limbo situation. It can still be pursued by creditors who are demanding payment or Companies House who are chasing to have annual documents filed. In this case it may be worth looking at using form DS01 mentioned above to strike the business off the Companies House register but making sure the procedures to close on this form have been followed. Great care should be taken when using the DS01 method and it is heavily recommended to get advice from a licensed insolvency practitioner who will be able to tell you if the company is ready to be struck off.
Contact Kirks Insolvency for guidance and support tailored to your business. If you’re worried about the cost of closing your limited company, we’re happy to provide a free, confidential discussion to put your mind at ease.