Venture Care: closing down a limited company 2.Going back to sole trader closing down a limited | Page 2

It’s an all-too-common story. Times were good, you had new clients coming out of
your ears, more work than you could handle and your bank account was
overflowing. You did the sensible thing and formed a limited company to make the
most of your earnings – clever you.
But then; disaster. Maybe your biggest client went belly-up, or a string of sexual
misadventures with a coworker’s spouse finally caught up with you. Your income
plummets, and suddenly the extra paperwork and Companies House filings just don’t seem
worth it – you pine for the days of sole tradership and finally, after much deliberation, you
decide to Dissolving a limited company
How do you do that, exactly?
Get everything squared away
Although you’ll go on conducting your business as a sole trader your limited company, as a
legal entity, must have all its loose ends tidied away. This means settling any outstanding
bills, and collecting any owed invoices, and making sure you make provisions for any
running costs that may be incurred between now and when your company is legally
wound-up (for example, if you’re paying an accountant to finalize your last batch of returns
or employing some credit control services to round up those late payers).
The good news is that these can be treated as legitimate business expenses, and so can
offset your final tax bill.
What else?
Companies House
You will need to file form DS01 with Companies House in order to ‘strike off limited
company/dissolving a limited company’ your company. This can only be done after the
company has not been trading for 3 months.
VAT
If you are VAT Registered, you will need to inform HMRC of your intention to de-register by
completing a VAT 7 form. Once this form is received, HMRC will contact you with your de-
registration date. You must also complete a final VAT Return that takes into account things
such as leftover stock or any equipment your business owns.
Corporation Tax
You must inform HMRC that your company is no longer trading so they do not issue further
reminders for Corporation Tax.