If, for whatever reason, you decide to close down your limited company there is an established procedure for when your business decides to cease trading. Cessation accounts are the final set of accounts your limited company will prepare. They cover the trading activity to your date of cessation from the date your company started trading or when the last set of statutory accounts were prepared.
Your cessation date is the date of the last invoice raised or expense incurred. The limited company will have continued to collect debts and pay creditors after the date the company ceased to trade.
When closing a limited company, the cessation accounts also reflect an assessment of the recoverability of unpaid debtors and creditors and also any fixed assets.
There are certain legal conditions you should be aware of, outlined Section 1004 and 1005 of the Companies Act 2006, that apply to the 3 months after ceasing trading activity.
Closing a limited company involves several key steps, including the preparation of cessation accounts, settlement of any outstanding debts, and ensuring all tax obligations are met.
Brookson offers professional limited company services to support and guide you through the entire business dissolution process, from preparing your cessation accounts to filing the necessary forms with Companies House. We can help ensure that all creditors are paid, that your final Corporation Tax liability is settled, and that you meet all HMRC requirements.
Cessation accounts are produced in order to determine final amounts owed by the limited company and the final funds available for you to withdraw.
Before a limited company can be dissolved all creditors need to be identified. As long as you have kept up to date with PAYE and VAT payments the only creditor likely to be owed by your limited company after you have ceased to trade is the Corporation Tax due on the profits for your last trading period as shown in your cessation accounts. HMRC requires a copy of your cessation accounts to support your final tax computation and CT600 Corporation Tax Return.
There is no requirement to file a set of final accounts at Companies House. Please be aware that until your company has requested voluntary strike off, it must file statutory accounts and other returns with Companies House every year. As a director of your limited company you may face prosecution and penalties for not filing accounts. Where statutory filings are not made in the required timescales, the Registrar will strike the company from the register, at which point all property, including monies in the business account/s will become the property of the Crown.
You may still have funds in your limited company bank account, but you can’t instantly withdraw them all. You can withdraw a final company dividend, but should leave the funds for the final Corporation Tax liability, and only if you are confident that all other liabilities have been settled.
You should close your limited company bank account when you are satisfied all debtors / creditors have been refunded/ paid, to ensure all monies have been collected and paid into the company bank account. Once the company has filed for dissolution, you will be unable to open another bank account in the company’s name to receive any repayments.
When the company is dissolved, the bank account(s), and any monies in it/them become ‘Bona Vacantia’ (un-owned goods), and will become the property of the Crown, under the control of the Treasury Solicitor. As such it is recommended that you withdraw the final company dividend prior to filing the DS01 form (striking off application by a company) with Companies House.
Section 1004 and 1005 of the Companies Act 2006, states that a company cannot make an application for voluntary strike off if, in the last 3 months, it has:
A limited company cannot apply for voluntary strike-off if its:
If your limited company has already been dissolved at Companies House you will still need to complete the closure with HMRC by filing a final limited company tax return and making the final tax payment.
