How Can I Legally and Voluntarily Close a UK Limited Company Using Striking Off or Form DS01?

​

A complete 2026 guide to closing a solvent LTD company without unpaid taxes, creditors, assets, payroll obligations or unresolved compliance issues

​

When a UK Limited Company is no longer needed, its directors may be able to close it voluntarily by applying for the company to be removed from the Companies House register.

This process is known as:

• voluntary strike off;

• company dissolution;

• a DS01 application.

Striking off is usually the simplest and least expensive method of closing a company that is solvent, has stopped trading and has completed all its tax, accounting and legal responsibilities.

However, filing form DS01 is only the final administrative step.

Before applying, the directors must deal properly with:

• Corporation Tax;

• final accounts and the Company Tax Return;

• VAT;

• PAYE and National Insurance;

• CIS obligations;

• employees;

• suppliers and other creditors;

• customers who owe the company money;

• director’s loan accounts;

• company bank accounts;

• contracts, leases and subscriptions;

• intellectual property and domain names;

• remaining cash and business assets;

• distributions to shareholders.

A company should not be struck off while important matters remain unresolved.

The central principle is:

DS01 does not erase debts, tax liabilities or director responsibilities. It should be used only after the company’s affairs have been brought to an orderly conclusion.

The Verdict at the Beginning

Voluntary strike off is normally appropriate where the company:

1. is solvent and can pay all its liabilities;

2. has stopped trading;

3. has not traded or sold normal trading stock during the previous three months;

4. has not changed its name during the previous three months;

5. is not subject to insolvency proceedings;

6. has no arrangement with creditors, such as a Company Voluntary Arrangement;

7. has collected money owed to it;

8. has paid its creditors and taxes;

9. has closed payroll, VAT and CIS registrations where applicable;

10. has distributed or transferred all remaining assets;

11. has completed its final accounts and Corporation Tax obligations;

12. has no unresolved claims, refunds, contracts or disputes.

A company that cannot pay its debts should not treat voluntary strike off as a substitute for insolvency proceedings. When a company is insolvent, creditor interests take priority and professional insolvency advice may be required. (GOV.UK)

What Does Striking Off Mean?

When Companies House strikes a company off the register, the company is dissolved and legally ceases to exist.

It can no longer:

• trade;

• enter contracts;

• receive or make payments;

• employ people;

• own property;

• operate its bank account;

• pursue debts in its own name.

The dissolution is confirmed by a second notice published in The Gazette. (GOV.UK)

Voluntary strike off is different from liquidation.

Voluntary strike off

Usually suitable for a straightforward solvent company that has stopped trading, settled its obligations and has relatively simple remaining affairs.

Members’ Voluntary Liquidation

A formal process managed by a licensed insolvency practitioner for a solvent company.

An MVL may be considered where:

• the company has significant cash or assets;

• total distributions will exceed £25,000;

• shareholders want potential capital treatment;

• the company has complex contracts or assets;

• formal liquidation protection and documentation are desirable.

Creditors’ Voluntary Liquidation

Normally used where the company cannot pay its debts and is insolvent.

Striking off should not be chosen merely because it is cheaper when liquidation is the legally appropriate process.

Who Can Submit the DS01 Application?

The application must be approved and signed by a majority of the company’s directors.

For example:

• one director: that director applies;

• two directors: both must approve and sign;

• three directors: at least two must approve and sign;

• four directors: at least three must approve and sign.

The shareholders do not submit the DS01 application unless they are also directors. However, shareholders must be notified of the application. (GOV.UK)

It is sensible to keep a written board minute recording:

• the decision to stop trading;

• the proposed cessation date;

• the intention to settle all liabilities;

• the proposed treatment of remaining assets;

• the approval of the voluntary strike-off application.

The Three-Month Rule

A company cannot normally apply for voluntary strike off if, during the previous three months, it has:

• traded or carried on business;

• sold normal trading stock;

• changed its registered company name.

It must also not be subject to insolvency proceedings or a formal creditor arrangement. (GOV.UK)

What counts as trading?

Examples may include:

• performing services for customers;

• issuing invoices for new work;

• selling goods or ordinary trading stock;

• entering new commercial contracts;

• taking new customer orders;

• continuing normal business operations.

Activities that may still be allowed

The company may carry out activities genuinely required to close its affairs, such as:

• seeking legal or accounting advice;

• deciding whether to apply for strike off;

• paying the Companies House application fee;

• collecting debts owed by customers;

• paying suppliers and taxes;

• terminating contracts;

• selling equipment that was used by the business;

• preparing accounts and tax returns;

• complying with statutory requirements.

For example, a company that normally sells building materials cannot continue selling its stock during the three-month period. However, it may be able to sell a van, laptop or other equipment previously used in the business because this is part of concluding its affairs rather than continuing normal trade. (GOV.UK)

Practical example

A company completes its final customer project on 15 April, issues its final invoice and ceases trading.

During the following months it:

• collects the final customer payment;

• pays suppliers;

• sells an old company van;

• prepares final payroll;

• closes VAT;

• completes final accounts.

These activities may be part of winding down the company.

The directors should nevertheless wait until the full three-month non-trading period has passed before submitting the strike-off application.

Striking Off Does Not Cancel Debts

A company should not file DS01 while it still owes money to:

• HMRC;

• suppliers;

• employees;

• landlords;

• lenders;

• customers owed refunds;

• former employees;

• contractors or subcontractors;

• pension schemes;

• local authorities;

• insurers;

• claimants or litigants.

A creditor can object after the proposed strike off is advertised in The Gazette. The creditor must provide evidence, such as an unpaid invoice, legal claim or other proof that the company owes money. HMRC can also object where tax, returns or other obligations remain outstanding. (GOV.UK)

If an objection succeeds, Companies House can suspend the strike-off process.

Even if the company is dissolved, a creditor may apply for restoration so that recovery action can continue. Court restoration is generally possible within six years, with different rules for certain personal-injury claims. (GOV.UK)

Dissolution therefore does not provide a safe or permanent method of escaping company debts.

Step 1: Confirm That the Company Is Solvent

Before closing, the directors should prepare a realistic statement of the company’s financial position.

Include:

Assets

• bank balance;

• unpaid customer invoices;

• stock;

• tools and equipment;

• vehicles;

• property;

• deposits;

• tax refunds due;

• insurance refunds;

• domain names;

• intellectual property;

• money owed by directors.

Liabilities

• Corporation Tax;

• VAT;

• PAYE and National Insurance;

• CIS deductions;

• wages and holiday pay;

• redundancy payments;

• supplier balances;

• loans and overdrafts;

• credit cards;

• rent and lease obligations;

• accountancy fees;

• customer deposits;

• legal claims;

• director loans owed by the company.

The company is solvent only if it can pay its liabilities as they fall due and its assets are sufficient to cover its debts.

If this is uncertain, directors should obtain insolvency advice before paying shareholders or filing DS01.

Step 2: Decide and Record the Final Trading Date

The company should establish a clear date on which normal trading stopped.

This date affects:

• the three-month waiting period;

• final payroll;

• VAT cancellation;

• Corporation Tax accounting periods;

• customer invoicing;

• final contracts;

• employee leaving dates;

• financial statements.

The company should stop:

• accepting new work;

• entering new contracts;

• advertising ongoing services;

• buying new trading stock;

• continuing ordinary business activities.

It can then focus solely on closing its affairs.

Step 3: Collect All Money Owed to the Company

Before dissolution, the company should collect:

• unpaid customer invoices;

• retentions;

• deposits;

• insurance payments;

• grants or rebates;

• Corporation Tax refunds;

• VAT repayments;

• CIS deductions recoverable;

• supplier refunds;

• loan repayments.

Do not dissolve the company while waiting for an HMRC refund.

Money received after dissolution normally belongs to the Crown because the company no longer exists. Recovering it may require restoration of the company, legal work, fees and a Bona Vacantia waiver. (GOV.UK)

Where a customer is unlikely to pay, the directors should decide whether to:

• pursue the debt;

• agree a settlement;

• formally write it off;

• transfer the right to collect it, where legally appropriate.

This should be documented before dissolution.

Step 4: Pay All Creditors and Cancel Contracts

The company should settle all identifiable liabilities, including small balances that might otherwise be overlooked.

Typical examples include:

• supplier invoices;

• accountancy fees;

• software subscriptions;

• mobile and internet contracts;

• website hosting;

• insurance;

• finance agreements;

• vehicle leases;

• office rent;

• utilities;

• bank charges;

• Companies House filing fees;

• employee expenses;

• customer refunds;

• professional subscriptions.

Check contracts for:

• notice periods;

• early-termination charges;

• automatic renewal clauses;

• personal guarantees;

• refundable deposits.

A director’s personal guarantee does not automatically disappear when the company is dissolved.

Step 5: Deal Correctly With Employees

If the company employs staff, the directors must:

• follow redundancy and dismissal rules;

• pay final salary;

• pay accrued holiday where required;

• process statutory payments;

• reimburse expenses;

• issue P45 forms;

• complete the final payroll submission;

• deal with employee benefits;

• inform the pension provider where applicable.

The PAYE scheme should be closed by submitting a final Full Payment Submission or Employer Payment Summary.

The company should:

• select “Final submission because scheme ceased”;

• enter the actual PAYE cessation date;

• enter a leaving date for each employee;

• issue P45s;

• pay outstanding PAYE and National Insurance;

• submit outstanding expenses and benefits returns;

• close any Employment Related Securities schemes where relevant.

HMRC must be told immediately when the business permanently stops employing people. Outstanding PAYE and National Insurance are generally due within 17 days, or 14 days for payment by cheque. (GOV.UK)

Step 6: Close Any CIS Contractor Scheme

A construction company that paid subcontractors must complete all outstanding CIS responsibilities.

This may involve:

• submitting every outstanding CIS300 monthly return;

• submitting any required nil returns;

• paying all CIS deductions to HMRC;

• issuing payment and deduction statements;

• notifying HMRC that the company has permanently stopped using subcontractors;

• closing the CIS contractor element of the PAYE scheme.

When a contractor permanently stops using subcontractors, HMRC must be informed. The company should stop filing monthly CIS returns only after the scheme has been properly closed. (GOV.UK)

If the company also operated PAYE, both PAYE and CIS closure positions should be checked.

Step 7: Cancel VAT Registration

If the company is VAT-registered and has stopped making taxable supplies, it must normally cancel its VAT registration within 30 days.

The company will need to:

1. submit the VAT cancellation request;

2. wait for HMRC to confirm the official cancellation date;

3. stop charging VAT from the appropriate date;

4. submit the final VAT Return;

5. pay any VAT due or obtain any repayment;

6. retain VAT records for six years.

The final VAT Return may need to account for stock and business assets still held at cancellation where:

• VAT was reclaimed, or could have been reclaimed, when the assets were purchased; and

• the total VAT due on the remaining assets is more than £1,000.

HMRC automatically cancels an associated EORI number when VAT registration is cancelled, although businesses with continuing customs requirements may need to take further action. (GOV.UK)

The company should not apply for dissolution while:

• a final VAT Return is outstanding;

• VAT remains unpaid;

• a VAT repayment is still expected;

• HMRC is reviewing the cancellation;

• stock or asset VAT has not been considered.

Step 8: Prepare Final Accounts and the Company Tax Return

The company must prepare final statutory accounts and a final Company Tax Return covering the period up to the end of trading or the relevant Corporation Tax accounting period.

The directors or accountant should:

1. determine the final trading date;

2. prepare closing accounts;

3. include asset sales and disposals;

4. calculate final profits or losses;

5. account for director’s loan balances;

6. calculate Corporation Tax;

7. submit the accounts and CT600 to HMRC;

8. tell HMRC that these are the final trading accounts and that the company is being struck off;

9. pay all outstanding Corporation Tax.

A company may be able to claim terminal-loss relief where the final trading period produces a qualifying loss. (GOV.UK)

From 1 April 2026, HMRC’s old joint online filing service is closed. Most companies must use recognised commercial software to submit the Company Tax Return and accounts to HMRC. Paper filing is generally available only where there is a reasonable excuse or the return is filed in Welsh. (GOV.UK)

Do final accounts need to be filed at Companies House?

GOV.UK states that final closure accounts must be provided to HMRC but do not have to be filed with Companies House solely because the company is being struck off.

However, the company remains legally active until dissolution. Existing overdue accounts, confirmation statements or other filing failures should not simply be ignored. Annual Companies House filing obligations continue while the company remains registered. (GOV.UK)

Step 9: Deal With Director’s Loan Accounts

The director’s loan account must be reviewed before strike off.

The company owes money to the director

If the loan account is in credit, the company owes the director money.

The company should normally repay the director before distributing the remaining profits to shareholders.

The director owes money to the company

An overdrawn director’s loan account is an asset belonging to the company.

It should not simply be ignored when the company is dissolved.

Options may include:

• repayment by the director;

• offset against valid salary or expenses;

• offset against a properly declared dividend where sufficient distributable reserves exist;

• formal write-off or release, after tax advice.

A written-off director’s loan can create personal Income Tax and company National Insurance consequences. Section 455 Corporation Tax and any later repayment claim may also need to be dealt with before dissolution. (GOV.UK)

If a Section 455 repayment is expected after the director repays the loan, the company should normally receive that repayment before dissolution. Otherwise, a future HMRC repayment could pass to the Crown.

Step 10: Deal With All Company Assets

Before the company is dissolved, deal with every asset, including:

• cash;

• vehicles;

• tools;

• computers;

• telephones;

• machinery;

• furniture;

• stock;

• deposits;

• property;

• shares and investments;

• trademarks;

• websites;

• domain names;

• social-media accounts;

• customer databases;

• intellectual property;

• tax refunds;

• debts owed to the company.

Assets may be:

• sold to an unrelated buyer;

• transferred to a shareholder;

• distributed to shareholders;

• transferred to another business;

• scrapped or written off.

Tax consequences must be considered.

Transferring an asset to a director or shareholder for less than market value can still create tax charges based on its market value.

Document:

• the asset;

• its market value;

• who received it;

• the transfer date;

• the payment made;

• any Corporation Tax, VAT or personal tax consequences.

Any asset remaining at dissolution passes to the Crown as bona vacantia. This includes money in the bank and future payments belonging to the company. (GOV.UK)

Step 11: Understand the £25,000 Distribution Rule

This is one of the most important tax issues in voluntary strike off.

When a company distributes its remaining cash or assets to shareholders before dissolution, the tax treatment depends partly on the total amount distributed.

Total distributions of £25,000 or less

Where the total distributions made in anticipation of dissolution do not exceed £25,000, they may be treated as capital distributions if the statutory conditions are met.

These conditions include that the company:

• has settled, or intends to settle, its debts;

• collects, or intends to collect, amounts owed to it;

• is genuinely being dissolved.

If the company has not been dissolved within two years, the capital treatment may be lost and normal distribution treatment can apply. (GOV.UK)

Capital treatment means the shareholder may pay Capital Gains Tax rather than Dividend Tax.

For 2026–2027, ordinary individual CGT rates are generally 18% and 24%, depending on the person’s available basic-rate band. (GOV.UK)

Business Asset Disposal Relief

Where the statutory conditions are satisfied, Business Asset Disposal Relief may reduce the CGT rate on qualifying gains.

For qualifying disposals from 6 April 2026, the BADR rate is 18%, subject to the lifetime limit and all eligibility conditions. (GOV.UK)

BADR is not automatic merely because a company is being closed.

Conditions may involve:

• the shareholder’s percentage of ordinary share capital;

• voting rights;

• entitlement to profits and assets;

• the company’s trading status;

• the shareholder’s employment or office;

• the two-year ownership and qualifying period.

Total distributions above £25,000

Where the total pre-dissolution distributions exceed £25,000, the special capital-treatment rule for informal striking off will not normally apply. The distributions are generally treated as income distributions and may be subject to Dividend Tax. (GOV.UK)

The £25,000 threshold applies to the total relevant distributions, not £25,000 separately for each shareholder.

Example 1: £18,000 remaining

A company has:

• £20,000 cash;

• £2,000 final liabilities;

• £18,000 available for shareholders.

Subject to the conditions, the £18,000 final distribution may receive capital treatment.

Example 2: £40,000 remaining

A company has £40,000 available after all liabilities.

If it distributes the money before informal strike off, the £25,000 capital-treatment exemption will not normally apply.

The shareholders should compare:

• Dividend Tax treatment through strike off;

• formal Members’ Voluntary Liquidation;

• pension contributions or other legitimate pre-closure planning;

• retaining or transferring assets.

Professional advice should be obtained before distributing the money.

When Might an MVL Be Better?

An MVL may be worth considering where the company has:

• more than £25,000 available for distribution;

• valuable property or investments;

• several shareholders;

• complex reserves;

• disputes over ownership;

• potential claims;

• significant tax refunds;

• substantial director’s loan balances;

• a need for formal creditor clearance.

Distributions during an MVL are normally capital distributions. However, liquidation costs apply and anti-avoidance rules must be considered. (GOV.UK)

Anti-phoenixing rules

HMRC may apply anti-avoidance rules where a shareholder closes a company, receives funds as capital and then continues the same or a similar trade through another company or structure.

The rules are designed to prevent people repeatedly converting profits that would normally be dividends into more favourably taxed capital receipts. (GOV.UK)

Closing one company and immediately starting another similar company should therefore be reviewed carefully before distributions are made.

Step 12: Close the Company Bank Account

The bank account should normally be closed only after:

• all customer payments have been received;

• all HMRC refunds have arrived;

• creditors have been paid;

• taxes have been settled;

• shareholder distributions have been made;

• final bank charges have cleared;

• direct debits and standing orders have been cancelled.

Download and retain:

• full bank statements;

• payment confirmations;

• evidence of distributions;

• closing statements;

• correspondence confirming closure.

Do not leave money in the account.

On dissolution, the bank account will be frozen and its balance will pass to the Crown. (GOV.UK)

Step 13: Submit the DS01 Application

The company can apply online or by paper.

Online application

The online fee is £13.

The applicant will normally need:

• the company number;

• the Companies House authentication code;

• an email address for each director who must approve the application;

• a debit or credit card or Companies House account.

Online filing is normally faster and includes validation checks. (Companies House)

Paper DS01

The paper fee is £18.

The form must:

• contain the correct company name;

• contain the correct company number;

• be signed and dated by the required majority of directors;

• show the printed names of all signatories;

• include the fee by cheque or postal order.

A paper cheque cannot be drawn from the bank account of the company being struck off. (GOV.UK)

Submitting a dishonest application can result in fines or prosecution.

Step 14: Notify Everyone Within Seven Days

Within seven days of submitting the application, the company must send a copy to all relevant parties.

This includes:

• shareholders;

• existing creditors;

• likely or potential creditors;

• HMRC;

• the Department for Work and Pensions where relevant;

• employees;

• former employees owed money;

• banks and lenders;

• suppliers;

• landlords;

• tenants owed deposits;

• guarantors;

• personal-injury claimants;

• pension trustees or managers;

• directors who did not sign the application.

The notification obligation continues after the application.

If someone later becomes a:

• director;

• shareholder;

• creditor;

• employee;

• pension trustee or manager,

they must also be notified within seven days. This obligation continues until dissolution or withdrawal of the application.

Failure to notify relevant parties is an offence and can result in a fine or, in the most serious cases, imprisonment. (GOV.UK)

Keep:

• copies of the DS01 application;

• letters sent;

• proof of postage;

• email confirmations;

• delivery records;

• a list of everyone notified.

Step 15: Monitor The Gazette and Companies House

After Companies House accepts the application, it publishes a notice in The Gazette.

The notice gives creditors and other interested parties an opportunity to object.

For a normal voluntary strike off, the notice generally allows at least two months before the proposed dissolution. If no valid objection is received, Companies House publishes a second Gazette notice confirming dissolution. (Companies House)

Directors should monitor the company record throughout this period.

Do not assume the company has closed merely because:

• DS01 was submitted;

• the first Gazette notice appeared;

• Companies House stopped sending correspondence;

• the company stopped trading.

The company legally exists until the second notice confirms dissolution.

Common Reasons Why Strike Off Is Suspended or Rejected

Companies House or a creditor may stop the process where:

• Corporation Tax remains unpaid;

• a Company Tax Return is missing;

• VAT returns are outstanding;

• VAT is unpaid;

• PAYE or CIS returns are missing;

• employees remain unpaid;

• suppliers are owed money;

• a legal claim exists;

• a director’s loan remains unresolved;

• the company still owns assets;

• someone was not notified;

• the company resumed trading;

• the company entered insolvency proceedings;

• the DS01 form was incorrect;

• the required directors did not approve it.

HMRC frequently maintains an objection while tax arrears remain outstanding and removes it only once the liabilities and compliance failures have been cleared. (GOV.UK)

What if Circumstances Change?

The directors must withdraw the strike-off application if the company becomes ineligible.

Examples include:

• the company restarts trading;

• it becomes insolvent;

• insolvency proceedings begin;

• a creditor arrangement is proposed;

• new liabilities are discovered;

• a major asset is identified;

• the directors decide not to close it.

The application can be withdrawn online or by filing form DS02. Only one director needs to sign the withdrawal. (GOV.UK)

The application can also be withdrawn voluntarily if the directors simply change their minds.

What Happens After Dissolution?

After the second Gazette notice:

• the company legally ceases to exist;

• director appointments end;

• the company cannot trade;

• bank accounts are frozen;

• remaining assets pass to the Crown;

• company contracts cannot normally continue;

• the company cannot pursue customers who owe it money.

However, dissolution does not erase the company’s history.

A creditor may seek restoration to recover a debt. Misconduct by directors of dissolved companies may still be investigated, and a director can potentially be disqualified. (GOV.UK)

How Long Should Records Be Kept?

GOV.UK recommends retaining business records for seven years after the company is struck off.

Records may include:

• bank statements;

• sales invoices;

• purchase invoices;

• expense receipts;

• payroll records;

• VAT records;

• CIS records;

• contracts;

• director’s loan records;

• dividend vouchers;

• board minutes;

• asset-transfer documents;

• tax calculations;

• final accounts and CT600;

• DS01 and notification evidence.

Companies that employed people should also retain copies of employers’ liability insurance policies and schedules. VAT records normally need to be retained for six years. (GOV.UK)

A Complete Practical Closure Timeline

Stage 1: Decision

• directors agree to stop trading;

• establish the cessation date;

• review solvency;

• document the decision.

Stage 2: Stop normal trading

• complete existing work;

• issue final invoices;

• stop taking new orders;

• begin the three-month non-trading period.

Stage 3: Settle operations

• collect customer debts;

• pay suppliers;

• terminate contracts;

• sell or transfer equipment;

• deal with stock;

• cancel subscriptions.

Stage 4: Employees and schemes

• pay employees;

• issue P45s;

• close PAYE;

• close CIS;

• deal with benefits and pension obligations.

Stage 5: Tax closure

• cancel VAT;

• submit final VAT Return;

• prepare final accounts;

• submit final CT600;

• pay Corporation Tax;

• claim valid refunds or reliefs;

• resolve director’s loan accounts.

Stage 6: Assets and shareholders

• value remaining assets;

• decide between dividends, capital distributions or MVL;

• consider the £25,000 rule;

• make valid shareholder distributions;

• close the bank account.

Stage 7: DS01

• wait until the eligibility conditions are met;

• submit the online or paper application;

• send copies to all interested parties within seven days;

• keep evidence.

Stage 8: Gazette period

• monitor Companies House;

• resolve objections;

• withdraw the application if the company becomes ineligible.

Stage 9: Dissolution

• confirm the second Gazette notice;

• preserve the complete closure file for the required period.

Worked Example: Straightforward Solvent Company

ABC Services Ltd stops trading on 30 April 2026.

At that date, it has:

Bank balance: £18,000
Customer invoices due: £7,000
Supplier balances: £3,000
Corporation Tax estimate: £4,000
Accountancy and closure costs: £1,500
Director’s loan owed by the company: £2,000

The company:

1. collects the £7,000 from customers;

2. pays the £3,000 suppliers;

3. repays the £2,000 director loan;

4. submits final payroll and closes PAYE;

5. submits final accounts and CT600;

6. pays £4,000 Corporation Tax;

7. pays £1,500 closure costs.

Available cash:

£18,000 + £7,000 − £3,000 − £2,000 − £4,000 − £1,500 = £14,500

Subject to the statutory conditions, the £14,500 distribution may potentially receive capital treatment because total distributions are below £25,000.

After the company has ceased trading for the required three months, the directors:

• close the bank account;

• submit DS01;

• send copies to HMRC, shareholders and other interested parties;

• monitor the Gazette process.

If no objection is received, the company is dissolved after the statutory notice period.

Worked Example: Company With £80,000 Remaining

XYZ Consulting Ltd stops trading and, after paying all liabilities, retains £80,000.

If it distributes £80,000 before informal striking off:

• the total exceeds £25,000;

• the special capital rule will not normally apply;

• the distribution will generally be taxed as income.

The shareholders should consider whether an MVL would provide a better result.

However, they must also consider:

• liquidation fees;

• BADR eligibility;

• ordinary CGT rates;

• anti-phoenixing rules;

• whether the same consultancy will continue through a new company;

• the timing of distributions;

• the shareholders’ personal tax positions.

DS01 should not be submitted until this tax planning has been completed and all assets have been dealt with.

Common Mistakes

Filing DS01 before completing final accounts

HMRC may object if Corporation Tax returns, accounts or payments remain outstanding.

Assuming the company must only stop issuing invoices

The company must stop normal business activity, not merely stop sending invoices.

Leaving money in the bank

The bank balance passes to the Crown on dissolution.

Waiting for an HMRC refund after dissolution

A refund issued to a dissolved company may also pass to the Crown.

Ignoring an overdrawn director’s loan

The loan is a company asset and may create Income Tax, National Insurance and Corporation Tax consequences.

Taking all remaining cash without checking the £25,000 rule

A distribution above £25,000 may be treated as income rather than capital.

Paying shareholders before creditors

Solvent company obligations and creditor claims must be settled first.

Forgetting VAT on remaining assets

The final VAT Return may need to include VAT on stock and assets held at deregistration.

Forgetting CIS closure

Outstanding monthly returns or deductions can cause HMRC to object.

Not notifying creditors within seven days

This is a statutory requirement, not an optional courtesy.

Believing strike off permanently removes debts

Creditors may object or restore the company after dissolution.

Starting the same business again without considering anti-avoidance

Capital treatment may be challenged where closure and restart arrangements are designed mainly to reduce Income Tax.

Abandoning the company and waiting for compulsory strike off

Directors remain responsible for accounts, confirmation statements and tax compliance until dissolution. Compulsory strike off is not a substitute for a properly managed closure.

​