How to close a Limited Company When Retiring in the United Kingdom

Have you decided that it’s time to retire? Is it finally time to hang up your suits, tuck away the computer and focus on having a bit of time to yourself? Retiring can be a great feeling, as you give yourself the freedom to do the things you’re yet to have done and go to the places that you’re yet to have seen. If you work a regular job then retiring is easy as you simply stop working there; however, if you own your own business then taking the right steps towards closing it down can prove to be somewhat tricky. If you currently find yourself in this position then be sure to keep reading as here we will be discussing the best ways to close your limited company whenretiring.

 

When it comes to closing your company upon retirement, there are a few different options available. If your company is dormant and you do not have any assets in it, shareholders on board or creditors then it is possible you can just dissolve the company going through the necessary channels in Companies House.

On the other hand, it’s more common for people who are retiring to have companies that are currently trading with creditors and shareholders still on board, as well as assets that need to be distributed. If that’s the case then you cannot just dissolve your company and instead, different steps need to be taken to close down everything effectively.

 

You should speak to professionals about what your best way forward is but chances are, if you have £25,000 or more in your company, the most effective option will be Members Voluntary Liquidation. If you are going to go down this road then you will need to get a licensed insolvency practitioner on board to help.

There is a difference between an MVL and a CVL. MVLs only apply to companies which are solvent. In fact, one of the first steps involved when starting an MVL is to ensure that your company is solvent, meaning you need to establish there are sufficient assets to pay off all of the liabilities of the company in full whilst also making a distribution of the remainder to the company’s shareholders.

 

A CVL is different as this applies to insolvent companies. Essentially, if a business is not in a strong enough financial position to pay off its creditors and all other liabilities then that company is considered insolvent. A CVL is where the directors of a company will choose to voluntarily liquidate their company to try and reduce the amount of debts they owe as much as possible before they cease trading.