What is the quickest way to close a limited company in Scotland?
If you have made the decision to close down your limited company, you may be wondering how you can do this quickly while also spending the least amount of money possible.
So what options are available in Scotland to company directors looking to close down their business in the quickest and cheapest way possible?
How to close a limited company for cheap
If your company is insolvent, and is therefore short of money, it is no surprise that you may be looking for ways to close your business for the lowest cost possible. While this may be the case, you still need to ensure that your company is wound down in the correct way which protects both yourself and your creditors from incurring further losses.
While cost is undoubtedly going to be a factor in your decision-making process, it is important to understand that for many companies who enter into liquidation – whether solvent or insolvent – its directors are not actually required to use any of their personal funds in order to pay for the fees involved.
How is company liquidation paid for?
In many liquidation cases, the costs involved are typically paid for by the sale of company assets or by using money in the company’s bank account.
As part of any liquidation process, all assets belonging to the company will be identified by the appointed insolvency practitioner, independently valued, before being sold to generate funds for creditors.
These funds will be used to pay the insolvency practitioner’s costs in full before the remainder is distributed to creditors. So, as long as your company has sufficient assets, which can include property, machinery, stock, office furniture, cash at bank, and outstanding invoices, you will not be personally required to foot the bill.
What is the cheapest way to close my limited company?
There are a number of ways a limited company can be closed and brought to an end in Scotland. These include formal liquidation processes as well as company strike off. All of these options come with a different cost; however, you are not able to select the one you want to use by price alone. Instead, you must account for your company’s current position and choose the one which is most appropriate which may not necessarily be the cheapest.
- Strike off – Strike off is the cheapest way to close an unwanted limited company. This is an informal closure option which does not require the input of a licensed insolvency practitioner. Strike off is suitable for those companies with little or no debt and/or a relatively low amount of assets. This could be a company which has never traded, or one which is able to repay its creditors in full but without a significant amount of capital to distribute to shareholders. Strike off is done via a DS01 form, processed at Companies House, and advertised in the Gazette. If you do have significant debts, you should expect your strike off application to be objected to by creditors who stand to lose out if you closed your company in this manner.
- Creditors’ Voluntary Liquidation (CVL) – If your company is insolvent – meaning it has debts which it cannot repay – you can close it down via a formal liquidation process known as a Creditors’ Voluntary Liquidation. A licensed insolvency practitioner will be appointed to oversee the orderly winding down of your company and will ensure all creditors are dealt with in accordance with the Insolvency Act 1986. All company assets will be liquidated and creditors repaid as far as possible. Any debt which remains outstanding after this point will be written off (unless this has been personally guaranteed).
- Members’ Voluntary Liquidation (MVL) – For solvent companies which have significant funds (typically over £25,000) to distribute to shareholders, a Members’ Voluntary Liquidation process could be the most cost-effective way of facilitating this. Distributions made via an MVL are classed as Capital Gains rather than income and are taxed accordingly. Further tax savings can be made when Business Asset Disposal Relief is used as part of the liquidation process. While an MVL does involve fees due to the input of a licensed insolvency practitioner, the potential cost savings which can be made often eclipse this amount entirely.
What is the quickest way to close my limited company?
Strike off is typically the quickest way to close a limited company, however, this process is not suitable for all companies who want to bring their business to an end. If your company is insolvent, attempting to deal with it via a strike off application is only likely to increase the total time it takes you to close the company.
This is because creditors, including HMRC, will object to the strike off application once this is advertised in the Gazette. You will then be faced with no viable alternative than to place your company into a formal liquidation process should you want to bring the business to an end.
This adds unnecessary time and stress into the situation as opposed to simply opting for liquidation from the start.
There is no exact timescale for a liquidation – whether solvent or insolvent – to complete. The length of the liquidation will depend entirely on the complexity of the company’s affairs at the time of closure.
If the company’s situation is straightforward and all assets and liabilities are known, the liquidation will be much quicker than if there is debate over what exactly the company owes or owns, where there is impending or ongoing legal action, or disputes between directors.
How can Scotland Liquidators help close my company quickly and cheaply?
At Scotland Liquidators we have a team of fully licensed insolvency practitioners here to give you the help and advice you need when closing your limited company.
We can help you understand the costs involved in liquidating your company, whether your company has sufficient assets to cover these fees, and how long the process is likely to take.
After talking you through your options, we will then be able to advise which route is the most appropriate for your company and its own unique situation. Whichever closure method is selected, we will be with you every step of the way.
Contact the team today for immediate help and advice.
