Solvent or insolvent?
A company is solvent when it can settle every debt in full — HMRC, suppliers, employees, lenders, landlords — before closing. If anything at all cannot be paid, no matter how small, the company is insolvent and the DS01 route below is not appropriate.
If your company owes money it cannot pay, see our guide on closing an insolvent limited company — that route involves appointing a licensed insolvency practitioner.
1. Bring Accounts and Corporation Tax Up to Date
The first job is to close the books cleanly. Prepare a final set of statutory accounts and a corporation tax return (CT600) covering the period to the date the company stops trading.
In many cases it makes sense to shorten the company's year end to a more recent date. This lets you file one final, short-period set of accounts to the day trading ceased rather than waiting months for the normal year end to come around.
Reconcile the bookkeeping, clear any director's loan account, deal with closing stock and fixed assets, and make sure VAT and payroll are fully reconciled into the final numbers.
2. File the Accounts and Settle All Taxes
File the final accounts at Companies House and the CT600 with HMRC, then pay any corporation tax, VAT and PAYE liabilities in full. The company must owe nothing on the day you apply for strike-off.
- Submit and pay the final VAT return, then deregister for VAT.
- Run the final payroll, issue P45s, submit the final FPS and EPS, and close the PAYE scheme.
- Pay the final corporation tax liability.
- Settle all supplier invoices and any director or shareholder balances.
3. File a DS01 with Companies House
Once the company is up to date and has paid everything, file form DS01 with Companies House to request voluntary strike-off. The form must be signed by a majority of the directors.
Companies House publishes a notice in The Gazette giving anyone with an interest two months to object. Provided nobody objects, the company is dissolved at the end of that period.
Within seven days of filing the DS01 you must also send a copy to anyone who could have an interest in the decision — shareholders, creditors, employees, and pension trustees.
4. Write to HMRC
Tell HMRC the company is closing so they can close down each tax record. A short letter or message through your business tax account is enough, but it needs to cover every tax the company is registered for.
- Corporation tax — confirm the cessation date and that the final CT600 has been filed.
- VAT — submit form VAT7 to deregister.
- PAYE — ask for the PAYE scheme to be closed once the final RTI submission has been made.
- CIS — if registered as a contractor, ask for the scheme to be closed.
5. Clear Every Asset Before Strike-Off
This is the step people get wrong. Roughly two months after the DS01 is filed, the company is struck off the register. On that date everything left inside the company — cash in the bank, equipment, intellectual property, debtors — is automatically frozen and becomes the property of the Crown under bona vacantia.
Banks freeze accounts as soon as the company is dissolved. Recovering money from the Crown afterwards is slow, expensive and not guaranteed. Make sure the bank account is at zero and every asset has been distributed before the strike-off date.
Distribute any remaining reserves to shareholders before strike-off. Where distributions exceed £25,000, specialist advice on a Members' Voluntary Liquidation (MVL) may be more tax-efficient than a straight DS01 — speak to us before you decide.
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Common Questions
What does solvent mean when closing a company?
Solvent means the company can pay all its debts in full — to suppliers, HMRC, employees, lenders and anyone else — before it closes. If the company owes anyone money it cannot pay, even a small amount, it is insolvent and must follow a different process.
How long does a DS01 strike-off take?
Companies House publishes the strike-off notice in The Gazette and, if no objections are received, the company is dissolved roughly two months later.
What happens to money left in the company bank account?
Any cash or assets left in the company on the day it is struck off pass to the Crown under a rule called bona vacantia. Always clear the bank account and transfer out every asset before the strike-off date.
Do I need to file final accounts and a corporation tax return?
Yes. You must bring accounts and the CT600 right up to the final trading date, pay any tax owed, and notify HMRC the company has ceased trading so PAYE, VAT and corporation tax records can be closed.
Should I shorten the company year end?
Often yes. Changing the accounting reference date to a more recent period lets you file one final set of accounts covering the period to closure, rather than running on for months.