How To Close A Limited Company That Never Traded?
Sometimes our plans change or things don’t work out quite as we expected them to. This rule still applies to business ventures and investments. That’s why it may be possible that you’ve created a business under the Companies House register, but never actually started the process of trading. If your plans have changed in this scenario, you’re likely to be wondering how to close a limited company that never traded.
Luckily, the steps involved are quite straightforward. The process for how to close a limited company that never traded simply involves applying for the company to be ‘struck off’ the Companies House register and dissolved.
How is this done?
In order for a company to be struck off, within the last 3 months it must not have:
- traded or otherwise carried on business
- changed its name
- engaged in any other activity except one which is necessary for the purpose of:
-making an application for strike off or deciding whether to do so (for example, seeking professional advice on the application or paying the filing fee for the strike off application)
-concluding the affairs of the company, such as settling trading or business debts
-complying with any statutory requirement
-made a disposal for value of property or rights that, immediately before ceasing to trade or otherwise carry on business, it held for the purpose of disposal for gain in the normal course of trading or otherwise carrying on business
When thinking about how to close a limited company that never traded, the process of striking off is simple and straightforward, as it’s easy for the above preconditions to be met.
How Do I Apply For A Strike Off?
It costs just £10 to get your business struck off and this is done by sending a form DS01 to the Companies House. The form needs to be signed by the majority of directors. Once the application has been accepted by the Companies House, the request will be published in the Gazette for a 2 month notice period. If no one objects to the strike off, the company will be dissolved.
A strike off is a simple process for how to close a limited company that never traded. However, what if you would like to close a limited company that has traded? There are different options for this depending on whether the business that you wish to close is solvent or insolvent.
If a business is still solvent i.e its assets are greater than its liabilities, then it can be dissolved via:
Members Voluntary Liquidation (MVL): This is the most tax-efficient method for extracting funds when dissolving a solvent company, whilst ensuring all affairs are wound up correctly
Strike Off: When talking about how to close a limited company that never traded, we mentioned that striking off removes a company from the Companies House register. The same applies for solvent companies, however more care will need to be taken to ensure the preconditions are met.
On the other hand, if a business is insolvent i.e its liabilities are greater than its assets, it can be closed down via:
Creditors Voluntary Liquidation (CVL): This removes creditor pressure, ensuring all loose ends are tied up correctly, fairly and in the best interests of all parties involved.
Strike Off: In some cases, an insolvent business will be able to apply for the company to be struck off. However, when insolvency is reached it’s essential that the interests of creditors are prioritised which is why a CVL is the most appropriate option in this instance.
If you have any further questions about how to close a limited company that never traded, or for guidance on closing one that has traded, please don’t hesitate to get in touch with the team at My Liquidation today.