SiteKiln gives you plain-English information, not legal advice. If you need advice specific to your situation, talk to a qualified accountant or insolvency practitioner.
Closing a company properly is mostly about choosing the right route, clearing your mess, and not leaving HMRC or suppliers hanging.
1. Two main routes: strike-off vs MVL
- Voluntary strike-off (DS01) -- for small, solvent companies that have stopped trading and don't have much left in them.
- Members' Voluntary Liquidation (MVL) -- for solvent companies with significant assets/cash to distribute, where a formal liquidation and capital treatment is tax-efficient.
If the company is insolvent (can't pay all its debts), neither of these are right -- you're into Creditors' Voluntary Liquidation (CVL) or other insolvency routes, not just "closing it down".
2. When a simple voluntary strike-off (DS01) is OK
Voluntary strike-off under Part 31 of the Companies Act 2006 (form DS01) is for companies that:
- Have stopped trading and not carried on business in the last 3 months.
- Have not changed name in the last 3 months.
- Are not insolvent and aren't in liquidation or in talks about it.
- Have not sold off assets or carried out certain transactions purely to dodge creditors in that 3-month window.
You use this when:
- There's little or no money left in the company after paying debts.
- You just want to close it cleanly and cheaply once everything's squared off.
3. DS01 strike-off -- step by step
Stop trading and tidy up
- Finish jobs, issue final invoices, pay suppliers and staff.
- Pay final Corporation Tax, VAT, PAYE/NIC as far as possible.
- Close PAYE scheme and deregister for VAT with HMRC.
Deal with assets and bank accounts
- Take out any remaining cash/assets properly as dividends or distributions.
- Close the company bank account.
- Anything left in the company after dissolution passes to the Crown (bona vacantia), so you don't want money or assets still inside when it's struck off.
Check you meet the conditions
- Not traded or changed name in last 3 months, not insolvent, no ongoing legal proceedings etc.
Apply to strike off
- Complete form DS01 (online or paper) and have it signed by a majority of directors.
- Send a copy of the application within 7 days to everyone who could be affected: shareholders, creditors, employees, any director who didn't sign, and any relevant pension/trustees.
Wait out the Gazette notices
- Companies House publishes a notice in the Gazette.
- If no-one objects within about 2 months, the company is struck off and a second notice confirms dissolution.
Withdraw if things change
- You must withdraw the DS01 (form DS02) if the company becomes ineligible -- e.g. starts trading again or becomes insolvent, or you change your mind.
Done properly, this is a low-cost admin process; done badly, it can be an offence and can be reversed if creditors complain.
4. When you should consider an MVL instead
An MVL (Members' Voluntary Liquidation) is for solvent companies with meaningful value to distribute:
- The company can pay all its debts (plus statutory interest) in full, usually within 12 months.
- There is often a healthy pot of cash or assets -- enough that treating the payout as capital, via an MVL, can be more tax-efficient than taking it as income/dividends.
In an MVL:
- Directors make a formal declaration of solvency.
- Shareholders pass resolutions to wind up the company and appoint a licensed insolvency practitioner as liquidator.
- The liquidator:
- Collects and sells assets (or distributes them "in specie").
- Settles all creditor claims.
- Distributes the remaining funds/assets to shareholders as capital.
Costs are higher than a simple strike-off, but for the right size of pot they can pay for themselves in tax savings. Your accountant will usually flag when it's worth it.
5. Things not to do when closing a company
- Don't use strike-off if the company is actually insolvent -- that's what CVLs and other insolvency procedures are for.
- Don't apply for strike-off and then quietly carry on trading or taking money out -- you must withdraw the application if the company starts trading again or no longer meets the criteria.
- Don't leave HMRC, banks or suppliers unpaid and hope strike-off will make them vanish -- they can object and resurrect the company to pursue debts.
- Don't leave assets in the company on dissolution -- cash, vans, kit can end up with the Crown and be expensive to get back.
If you're at all unsure whether the company is solvent or not, get professional advice before you touch DS01 or MVL.
6. Who to contact
- Companies House -- strike off a company -- official DS01 guidance and online filing: gov.uk/strike-off-your-company-from-companies-register (free guidance, small filing fee)
- Companies House helpline -- 0303 1234 500 (free)
- HMRC -- to close PAYE scheme, deregister for VAT, file final returns: gov.uk/closing-a-limited-company (free)
- Your accountant -- final accounts, Corporation Tax return, director's loan position, and whether MVL is worth it for tax purposes.
- A licensed insolvency practitioner -- if considering MVL or if there's any doubt about solvency. Find one via the Insolvency Service: gov.uk/find-an-insolvency-practitioner (free to search)
- The Insolvency Service -- general guidance on company closure and insolvency options: gov.uk/government/organisations/insolvency-service (free)
7. Sources and legislation
- Companies Act 2006 -- Part 31 (dissolution and restoration to the register), sections 1000-1034 (voluntary strike-off). legislation.gov.uk/ukpga/2006/46/part/31
- Insolvency Act 1986 -- Part IV (winding up of companies), including MVL and CVL procedures. legislation.gov.uk/ukpga/1986/45
- Companies (Striking Off) Regulations -- requirements for DS01 applications and notifications.
- Bona vacantia -- Crown's right to ownerless property from dissolved companies: gov.uk/government/organisations/bona-vacantia
8. Related guides on this site
- 8.1 Sole trader vs limited company -- honest comparison
- 8.2 Companies House basics -- annual filings, confirmation statements
- 8.17 Partnerships in construction -- how to structure them properly
- 8.3 Business bank account -- why you need a separate one
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