Insolvency Practitioners

McAlister & Co

CALL 03300 563 600

What’s the cheapest way to close a limited company?

If carried out correctly and at the earliest warning signs, many directors do not have to pay to close a limited company.

A common misconception is that if a company is being liquidated by the court, or being closed voluntarily, a director will have to pay out of their own pocket to meet the fees. If caught at an early stage, insolvency can often be paid for through company assets.

McAlister & Co will always aim to make a company closure self-funding.

As licensed insolvency practitioners, we advise directors on how to close down a limited company in a way that’s best for them. Our professional and impartial advice will always aim to show directors the cheapest way to close a limited company. Our staff are experts in corporate insolvency and with their combined knowledge of over 100 years, McAlister & Co will always advise on the best solution. Closing a limited company may be as simple as filing a form at companies house and paying a £10 fee.

Directors paying staff their final wages out of their own pocket is one of the most common mistakes we encounter. If there is not enough capital in the company, unpaid wages and redundancy payments are paid for by the Government. McAlister & Co will always advise and help any employees that require assistance with this process. Many of the common questions directors ask us can be found below.

If your company is insolvent i.e typically unable to pay creditors when due or it has simply run out of cash, it is a director’s legal obligation to cease trading and seek advice about options to preserve or close the business. There are many options available to directors when they are using fully qualified insolvency practitioners, many of which will enable them to close the company at no cost or minimise payments to creditors, effectively preserving the business.

All insolvencies are impacted by when directors act, so if you need help with how to close down a limited company, contact us.

Sandra McAlister FCCA, FABRP

Email: [email protected]
Head Office: 0800 046 8297

Sandra qualified as a chartered accountant in 2002 and became a licensed insolvency practitioner in 2005. Prior to establishing McAlister & Co in 2007, Sandra enjoyed a successful career with a leading national Insolvency firm. Working predominantly within the corporate insolvency sector, Sandra has over 15 years’ experience and handles all aspects of business rescue and insolvency.

Sandra is the former Chairman of the ACCA network panel for Swansea and West Wales.

Simon Barriball FCCA FABRP

Email: [email protected]
Office: 01443 866 370

Simon is a certified chartered accountant and licensed insolvency practitioner with extensive experience advising companies and individuals on insolvency, recovery and turnaround solutions. Simon joins us from a leading national insolvency practice and leads our Tredomen office.

Frequently Asked Liquidation Questions

Can I close my company and start again without the debt?
This is often referred to as a “Phoenix” and many think this is illegal but in fact, carried out correctly, it is an effective means to preserve an insolvent company. A pre-pack sale is a process coordinated by the existing management of an insolvent company where the business and assets are sold at market value to a new or related company or to the existing directors, who then re-employ the existing staff and produces the same goods or services, often from the same premises. Of course, pre-packs have generated some negative publicity particularly if the former directors are seen to be simply getting rid of debts and unwanted or onerous contracts, but conducted correctly the process can be beneficial for all concerned.

What does a Liquidator do?

Anyone undertaking the duties of liquidator (administrative receiver, administrator or supervisor of a corporate voluntary arrangement) must be a qualified insolvency practitioner (IP).

When the liquidator is appointed he assumes the role of the directors and their powers are transferred to him. He will carry out investigations and report to the Companies House Registrar, interview the directors of the company and recover money to repay creditors and if possible, shareholders and dismantle and de-register the company officially.

A Debt Relief Order, sometimes known as a mini-bankruptcy, is also an option if you have no assets and very little income left at the end of each month.

What about staff wages?

Very often directors come to us having used the last of company’s funds to pay staff wages when in fact a legitimate claim can be made to the Redundancy Payments Office. These include unpaid wages in the four months prior to the commencement of the liquidation, statutory notice, redundancy pay and unpaid holiday pay. Currently, the basis of calculations is on a statutory maximum of £479 gross per week. Contact us for advice.

A Debt Relief Order, sometimes known as a mini-bankruptcy, is also an option if you have no assets and very little income left at the end of each month.

As director can I claim unpaid wages & other benefits from redundancy payments?

You are also entitled to claim these sums. However, in some instances, where a director is also the controlling shareholder, a claim may be challenged by the Department of Trade and Industry. Contact us for more information.

Can I dissolve my company instead of liquidation?

A limited company can request to be closed/dissolved under Section 1003 of the Companies Act 2006. Dissolution is infrequently used as it is only permitted under certain specific circumstances. Creditors must be notified of the intention to dissolve the company and can reject the application if they see fit. You are required to complete and submit form DSO1 striking off application and pay the £10 filing fee. If your application is rejected contact us for advice.

Can I start another company with the same name?

This is possible but great care should be taken. You must not trade with a similar name as the previously liquidated company without seeking legal advice. Breaching Insolvency rules is a possible criminal offence. Contact us so we can guide you through the process.

Can I dissolve my company instead of liquidation?

A limited company can request to be closed/dissolved under Section 1003 of the Companies Act 2006. Dissolution is infrequently used as it is only permitted under certain specific circumstances. Creditors must be notified of the intention to dissolve the company and can reject the application if they see fit. You are required to complete and submit form DSO1 striking off application and pay the £10 filing fee. If your application is rejected contact us for advice.

Can I become director of another company if I liquidate this one?

Yes, you can. The law allows this if you act responsibly.

The Company owes substantial amounts of tax. Can they come after me for that?

The Inland Revenue has the power to issue a Personal Liability Notice against any officer of the Company for any unpaid NIC. There must be neglect to pay or fraud on the part of the directors. The Revenue can pursue individual employees for unpaid PAYE where the employee concerned knew that the employer had not deducted tax. If you have an overdrawn directors loan account this can be seen as remuneration and made subject to tax. You need to be very careful to ensure adequate wage records are kept.

Will the directors be allowed to buy the business or assets of the Company from the Liquidator?

The Liquidator is under a duty to obtain the best price that he can for the assets of the Company. He will usually obtain a valuation of these from a professional valuer. If the directors’ offer is the best offer he receives, then the assets can usually be sold to the directors.