How to dissolve a company

Company dissolution is the formal process of closing down a company and removing it from the official register at Companies House. Once dissolved, a company will cease to exist as a legal entity, meaning it can no longer trade, hold assets or enter into contracts. Any remaining assets pass to the Crown and are legally known as bona vacantia.

Dissolving a solvent company

Whilst there are other routes available, dissolving, or “striking off” a company from the companies register is generally the most efficient way of closing down a solvent company i.e. one that can still afford to pay its bills. To dissolve a company, the directors must ensure it meets the requirements for closure (set out below) before submitting form DS01 to Companies House. This form must be signed by the majority of directors and submitted with the accompanying fee of £33 (£44 for paper submissions). 

Key steps and conditions:

Solvency and cease trading. The company must not be threatened with insolvency and must have stopped all business and trading for at least three months before submitting form DS01 nor can it have changed its name during this time. Only a few permitted activities are allowed during this period, such as disposing of assets and completing administrative tasks with the overriding objective of closing down the business properly.

Settle Debts. The directors must settle all debts, pay all creditors and distribute any remaining assets to the shareholders in accordance with the company’s articles and shareholding proportions. The company’s bank accounts can then be closed.

Contact HMRC. Before submitting form DS01, specialist tax advice should be taken as the directors must ensure that all of the company’s tax obligations are fully settled. This includes: 

• Preparing and filing final accounts and a final company tax return with HMRC
• Paying any outstanding corporation tax, VAT and any other tax liabilities
• Making arrangements for the final PAYE submissions (if the company has employees)
• Arranging VAT de-registration
• Notifying HMRC that the company has ceased trading, the date business activities stopped and the intention to dissolve it

If HMRC are not informed in advance and the above points are not properly addressed, it is common for HMRC to object to the dissolution which can cause delays or even prevent the company from being dissolved. 

Notify other interested parties. Anyone else who could be affected by the dissolution must be informed of the application including, but not limited to:

• The company’s shareholders (members)
• Employees
• Creditors
• Any directors not signing the DS01 
• Managers or trustees of any employee pension fund

It is a legal requirement for a copy of the complete application to be delivered to the last known address of the interested parties within 7 days of submitting the strike off application and it is an offence not to do so which carries the risk of fines or even prosecution. Proof of delivery should be kept when sending out copies of the application.

Grounds for objection. Once form DS01 has been received by Companies House, the dissolution will be published in The Gazette (the official UK journal which sets out the details of any strike-off applications) where any objections can be raised by interested parties. Objections often come from those with claims against the company or debts owed to them by the company. These objections must be presented with evidence, such as invoices or proof of debts. Directors of the company are also able to object and any director can request for the dissolution to be withdrawn by submitting form DS02 at Companies House. 

If no objections are received within two months of the Gazette announcement, the company will be struck off and a second announcement will be published in The Gazette confirming that the company has been dissolved. Whilst the company will no longer legally exist from this point, certain company information will still be visible at Companies House and will remain available to the public for 20 years following the dissolution.

Please contact our corporate team for further advice if you are considering dissolving your company.