Dissolve a company or put it on ice?

Hopefully, running your own business has been a good experience. When business comes to an end, we know that the double barrelled question “should I dissolve my company or put it on ice” is often asked.

If you have finished with the company and no longer need it, then dissolve it. Keeping it will only add to your costs. A simple dissolution guide is here.

It is not possible to ever make a traded company become truly dormant again. There will always be things to do. A dormant company is one which has been incorporated and which has never traded. So if you want to put your traded company “on ice” you should be aware that Companies House will still want a Confirmation Statement every year, and you will still have to file statutory accounts. You cannot use the Companies House form DCA (Dormant Company Accounts) to do this, because there will be legacy figures which are carried forward each year.

So it’s up to you. Keep the company alive and do the annual submissions yourself to keep costs down. Or keep paying the accountant (a reduced fee) to stay on side with the government.

We know from experience that people who “put the company on ice” normally keep it there for about three years, keep paying professional fees, and then go and dissolve the company anyway. If that’s going to be you, then maybe you should take the easy option and just dissolve it now? You can always incorporate a new company later.

If you do want to keep the company on ice (and not use it at all) we will discount our fees by 50%. However if the company is used, even if it’s for just one project earning one fee, then normal accounts are needed and normal fees will apply. OK, if it was genuinely only one project and one fee then you may not need to pay exactly 100% of our standard costs, but it will be something nearer to 100% than to 50%.

New company reference numbers

When a new company is incorporated, both Companies House and HMRC will issue reference numbers. This may take between 14 and 28 days. In order to submit documents electronically, we need to ask you to let us know the reference in each case.

HM Revenue & Customs call it a Unique Taxpayer Reference or a UTR. Companies House talks about an authentication code. Examples of the tax office form and the Companies House letter are shown below. In each case, please let us know the reference or the code. We don’t need the letter, just a simple email with the reference or the code, thanks.

Once we have the reference number from HMRC we will complete the form CT41G for you using our own electronic proforma. You do not need to do anything with the original paper form. File it in your system just in case you need the UTR later.

We will check that the Companies House authentication code works on their  web site, and then we’ll keep it safe pending the submission of various forms in future.

Company Dissolution

Once you have decided that a company is no longer needed, it can easily be dissolved. You must first ensure that the accounts and corporation tax return for the final period of trading have been submitted and that any tax liability has been paid.

If there is a tax repayment for the final year, you will want to have received that before you close the bank account and dissolve the company. If a company still has money in a bank account on the date of dissolution, you will forfeit that money and it is sent to the government’s Solicitor General. It is a nightmare to get a company reinstated and then recover money from the Solicitor General. So we recommend that you complete your finances first and only then, dissolve your company.

Do not close the company bank account until your tax affairs are settled!

Do close the company bank account before the dissolution form goes in!

If Proactive has prepared the accounts and tax return for the final period of trading then we will be in position to work on the dissolution for you. This normally involves a fee which might be waived in the simplest of cases.

If you want to do this yourself and have an account with Companies House then you can start the process here:

https://guidedfiling.companieshouse.gov.uk/start?t=DS01

The procedure has to allow for legal notices to be published in the London Gazette over a 2 or 3 month period. It normally takes around 3 to 4 months to have a company dissolved. Once the process has been started, no more forms should be sent to Companies House for this particular company, none whatsoever. If that happens, the dissolution process will be cancelled. You will need to start the whole thing again!

If you need further advice, please contact us.