The cessation process is set by HMRC and Companies House and a number things need to happen in a specific order, starting with the generation of your final cessation accounts and finishing with an advert in the London Gazette.
Generally, you prepare statutory accounts as usual- but as this is your final set of accounts, your statement of financial position (formerly your balance sheet) should represent assets/liabilities that will be liquidated (turned into cash) to settle company creditors. Any remaining cash is yours to distribute as dividends and/or as a capital distribution to shareholders.
If you find yourself in a position where you no longer require a limited company, then you – as the Director – have a responsibility to close it down in a compliant manner. You do this following the cessation guidance set by HMRC and Companies House.
First of all, HMRC will expect a set of cessation accounts to display all the final outstanding assets and liabilities at the date of cessation. Your cessation accounts are prepared in exactly the same manner as your former annual statutory accounts and we strongly recommend that you don’t try to complete cessation accounts yourself without professional support.
HMRC require submission of any final returns for PAYE and VAT schemes, displaying any final liabilities. These amounts will need to be settled and once this is done, you can begin deregistration for all PAYE and VAT schemes- essentially advising HMRC departments of your intention to cease trading going forward. Once you have agreed your Cessation accounts they can then can be submitted to HMRC along with the company tax return confirming your corporation tax liability. Accounts for the Registrar of Companies are also submitted to Companies House.
Once you have settled your final corporation tax liability with HMRC and withdrawn your remaining funds you can then close your company bank account.
We suggest that you take appropriate tax advice with regards to withdrawing the funds in a tax efficient manner. If you have less than £25,000 to distribute after paying all your company liabilities then you can submit a DS01 striking off form to Companies House.
Companies House will then advertise the company in the London Gazette to allow any objections to be made by interested parties- in effect, if someone objects, then the strike off is suspended for six months. Assuming there are no objections, then the company is struck off the Companies House register in approximately two months and will cease to exist.
Please note, if you have more than £25,000 to distribute after you settled all your company liabilities, then cessation accounts are still required- but you are required to formally appoint an insolvency practitioner to administer the wind up of your company under a members voluntary liquidation, rather than striking off your company using a DS01 striking off form.