Closing a Company with Companies House

At Towerstone Accountants we provide specialist limited company accountancy services for directors and owner managed businesses across the UK. We created this webpage for people responsible for company filings and statutory records who want clear guidance on Companies House requirements without jargon. Our aim is to help you understand your obligations, avoid filing errors, and stay compliant with Companies House and HMRC.

Closing a company at Companies House is something many directors eventually have to deal with, whether because the business has finished trading, never really got going, or is no longer needed. While the process can be straightforward in the right circumstances, it is also one of the areas where I see the most costly mistakes, usually because people assume that stopping trading automatically closes the company. It does not.

A limited company is a separate legal entity, and it continues to exist until it is formally closed on the Companies House register. If you do not close it properly, you remain responsible for filings, penalties can continue to accrue, and HMRC can still pursue outstanding obligations.

In this guide I am going to explain exactly how to close a company at Companies House, the different routes available, when each route is appropriate, what you must do before applying, how HMRC fits into the process, and the common errors I see in practice. I am writing this from the perspective of a chartered accountant who has closed hundreds of companies for directors over the years, and everything here reflects how the process works in the real world.

First decide whether your company is solvent or insolvent

Before you do anything at Companies House, you must establish whether the company is solvent. This single point determines which closure routes are available to you.

A company is solvent if it can:

• Pay all of its debts in full
• Pay those debts within 12 months

A company is insolvent if it:

• Cannot pay its debts when they fall due
• Has liabilities greater than its assets

Trying to close an insolvent company using a solvent route is a serious mistake and can expose directors to personal risk.

The main ways to close a company at Companies House

There are two broad categories of closure, solvent closure and insolvent closure. Companies House is involved in both, but the processes are very different.

The main options are:

• Voluntary strike off
• Members’ Voluntary Liquidation
• Creditors’ Voluntary Liquidation
• Compulsory strike off by Companies House

Only the first two are appropriate for solvent companies.

Voluntary strike off

Voluntary strike off is the most common and simplest way to close a solvent company that has stopped trading and has no outstanding issues.

This process removes the company from the Companies House register entirely.

When voluntary strike off is appropriate

Voluntary strike off is suitable if all of the following apply:

• The company has stopped trading
• The company has not traded for at least three months
• The company has no outstanding debts
• The company is not involved in legal action
• The company is not subject to insolvency proceedings

If any of these conditions are not met, strike off is not appropriate.

What you must do before applying for strike off

This is where many directors go wrong. Applying to Companies House is the final step, not the first.

Before you apply, you must deal with everything else.

Stop trading properly

The company must stop trading completely. This includes:

• No sales
• No purchases
• No issuing invoices
• No receiving income

Any trading after the application is made can invalidate the strike off.

Settle all debts

Every creditor must be paid in full.

This includes:

• Suppliers
• HMRC
• Banks
• Directors
• Employees

HMRC debts are often overlooked, particularly Corporation Tax and VAT.

Prepare final accounts

You must prepare final accounts up to the date trading ceased. These accounts are required to calculate the final Corporation Tax position.

This step is not optional, even if the company made a loss.

Submit a final Corporation Tax return

A final Corporation Tax return must be filed with HMRC, clearly marked as the final return.

Corporation Tax must be paid in full before applying for strike off.

Close VAT registration if applicable

If the company is VAT registered, you must:

• Deregister for VAT
• Submit a final VAT return
• Pay or reclaim any VAT due

HMRC will object to strike off if VAT is still outstanding.

Close PAYE schemes

If the company had employees or paid directors through payroll, you must:

• Submit final payroll submissions
• Issue P45s
• Close the PAYE scheme

Unclosed PAYE schemes are a common reason for strike off objections.

Deal with company assets

Any assets remaining in the company must be dealt with before closure.

This includes:

• Cash balances
• Equipment
• Vehicles
• Stock

If assets are left in the company when it is struck off, they can pass to the Crown. This is a mistake that is very difficult to reverse.

Distribute remaining funds

Once all debts are paid, remaining funds can be distributed to shareholders.

For small balances, these distributions are usually treated as capital rather than income, but tax advice is essential here, as the treatment depends on amounts and circumstances.

Apply to Companies House for strike off

Once everything else is complete, you can apply to Companies House to strike off the company.

This is done by submitting form DS01.

The application can be submitted:

• Online
• By post

There is a small filing fee.

Who must sign the application

The strike off application must be signed by:

• A majority of the directors

If there is only one director, that director signs.

Notifying interested parties

Within seven days of submitting the application, you must notify all interested parties.

This includes:

• Shareholders
• Employees
• Creditors
• HMRC
• Banks

Failing to notify interested parties is a criminal offence, even if unintentional.

What happens after you apply

Once Companies House receives the application:

• A notice is published on the public register
• A two month objection period begins

During this time, interested parties can object to the strike off.

Common reasons for objections

Objections often come from HMRC.

Typical reasons include:

• Outstanding Corporation Tax
• Open VAT registrations
• Unfiled tax returns
• Unpaid PAYE

If an objection is raised, the strike off process is suspended until the issue is resolved.

Final dissolution

If no objections are raised, a second notice is published and the company is dissolved.

At this point:

• The company no longer exists
• Directors’ responsibilities end
• The company is removed from the register

This is the point at which the company is legally closed.

Members’ Voluntary Liquidation

If the company has significant assets or retained profits, a Members’ Voluntary Liquidation may be more appropriate.

This is still a solvent closure but involves a licensed insolvency practitioner.

It is commonly used where:

• There are large cash reserves
• The company has valuable assets
• Tax efficiency is important

The process is more complex and more expensive, but can be worthwhile in the right circumstances.

Closing an insolvent company

If the company cannot pay its debts, you must not apply for strike off.

Insolvent companies are closed through formal insolvency procedures.

The main options are:

• Creditors’ Voluntary Liquidation
• Compulsory liquidation

These processes involve insolvency practitioners and are designed to protect creditors.

Trying to strike off an insolvent company can result in director disqualification or personal liability.

What happens if Companies House strikes off your company

If you do nothing, Companies House may strike off your company itself for non compliance.

This usually happens if:

• Accounts are not filed
• Confirmation Statements are missed

This is not a safe or clean way to close a company.

Risks include:

• Assets passing to the Crown
• HMRC pursuing debts personally
• Director disqualification proceedings

I never recommend relying on compulsory strike off.

Records you must keep after closure

Closing a company does not mean you can discard records immediately.

You must keep:

• Accounting records
• Tax records
• Payroll records

These should be kept for at least six years.

HMRC can still enquire into periods when the company existed.

Director responsibilities after closure

Once a company is properly dissolved:

• You are no longer responsible for filings
• You are no longer a director
• New liabilities cannot arise

However, you can still be held accountable for actions taken while the company existed.

Common mistakes I see in practice

The most common errors include:

• Applying for strike off before dealing with HMRC
• Leaving cash in the company
• Forgetting VAT or PAYE schemes
• Not notifying interested parties
• Assuming inactivity equals closure

These mistakes can undo the entire process.

Should you get professional help

Some company closures are straightforward, particularly where the company never traded or stopped cleanly.

However, advice is strongly recommended if:

• The company has traded
• There are tax liabilities
• Assets need distributing
• Multiple directors or shareholders are involved

The cost of advice is often far lower than the cost of correcting mistakes later.

Final thoughts

Closing a company at Companies House is a process, not a single form. The application itself is simple, but the preparation behind it is where most of the work lies. When done properly, closure allows you to draw a clean line under the company and move on without ongoing risk or obligation.

The key is to treat closure with the same care as incorporation. If you deal with tax, debts, assets, and filings in the right order, closing a company can be smooth and final. If you rush or cut corners, the consequences can follow you for years.

You may also find our guidance on how to inform hmrc of company strike off and how to make a company dormant on companies house helpful when dealing with related Companies House tasks. For a broader overview of filings, registers, and statutory duties, you can visit our companies house hub.