Closing a Company: How Much Will It Cost?

January 26, 2022 / News & General

Thousands of directors make the decision to close their limited companies each year.

Whether you no longer have a use for the business, are looking to retire, or no longer see a sustainable future for the company, there are many factors to take into consideration when closing a company, including how much it will cost.

To help make the path ahead easier, in this guide Clarke Bell outlines what is involved in closing a company online and how much you can expect it to cost, to help avoid any nasty surprises along the way.

Closing an insolvent company through Creditors’ Voluntary Liquidation (CVL)

The best way to close a company that is insolvent and is no longer viable is through Creditors’ Voluntary Liquidation.

A company is insolvent when it has liabilities that outweigh its assets, or it can no longer pay its bills or cover its daily costs.

A CVL is a completely voluntary form of liquidation that is initiated by the company directors and shareholders.

Creditors’ Voluntary Liquidation is a good route to take into order to avoid being forced into compulsory liquidation by creditors who are owed money.

Such creditors can issue a winding-up petition to the courts which, if successful ,will see your company being forced to liquidate.

Although a CVL results in the company being liquidated and dissolved, there are many benefits for both directors and creditors:

  • This is a good way for directors to take control of the situation before things get any worse and to avoid being forced into liquidation
  • As a voluntary insolvency process, the director will be free to choose which Insolvency Practitioner they appoint to liquidate their company
  • Directors will be free to open another business in the future if they wish
  • Director’s personal finances won’t be impacted

Cost of closing a company through Creditors’ Voluntary Liquidation

The cost of closing a company through Creditors’ Voluntary Liquidation will vary between Insolvency Practitioners.

At Clarke Bell we know that insolvency costs can get out of control which is why we offer affordable and competitive pricing.

Our CVL fees are based on a combination of a fixed fee and a percentage of realisations. What’s more, we also offer 2 different pricing structures for CVL depending on the circumstances.

Our Basic CVL costs £2,995 all inclusive, whereas our Complex CVL is priced on a case-by-case basis.

In some cases, the cost of the liquidation can be met from the value of assets sold. We will advise you if this is possible in your case.

Closing a solvent company through Members’ Voluntary Liquidation (MVL)

On the other hand, the best way to close a company that is solvent and has assets of £25,000 or more is through a Members’ Voluntary Liquidation.

Like a CVL, a Members’ Voluntary Liquidation is a process that liquidates and winds-up a company. However it is only available to solvent companies.

An MVL is also completely voluntary and is a process initiated by company directors and shareholders at a time that is right for them and the business.

This might be because the director has decided to take a step back in the company to a PAYE role, they have decided that it is time to retire altogether, or it might be that they are looking to discontinue and liquidate a certain arm of the business.

Whatever the reason for closing a company with an MVL, it is a popular route taken by many. This is because it is an HMRC approved, tax-efficient way to close a company.

When closing a company through Members’ Voluntary Liquidation, any funds taken out are subject to Capital Gains Tax rather than Income Tax. This is set at just 10% rather than income tax which would be charged at 18% for the basic level and 28% for the higher level, leading to significant savings for directors.

Another benefit to closing a company through an MVL is that companies that qualify for Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief before 6th April 2020,) can sell all or part of the company and pay just 10% in Capital Gains Tax on profits over the lifetime of the business (up to a limited of £1 million.)

Cost of closing a company through Members’ Voluntary Liquidation

Just as with Creditors’ Voluntary Liquidation, the cost of closing a company through Members’ Voluntary Liquidation will vary from company to company. However, at Clarke Bell we always endeavour to offer affordable prices, to help make the process that little bit easier for you.

We have a range of categories for our Members’ Voluntary Liquidation service, meaning we can help you close down your solvent company with an MVL, whatever your situation is.

Our prices are affordable and we make the distributions to shareholders quickly. Our prices start from just £995+ VAT for a Basic MVL or £1,495 + VAT for a Standard MVL.

Now you know the costs involved, let Clarke Bell help close your company online today

Whether you are an insolvent company looking to close through a CVL or are considering closing your solvent company through Members’ Voluntary Liquidation, Clarke Bell are here to help.

We work closely with directors to really get to know their situation in order to find the best route forward. What’s more, we offer remote services, meaning you can close a company online wherever you are in the UK.

Over the past 28 years we have helped thousands of businesses with the liquidation process, so you can rest assured you are in safe hands.

To find out how we can help you, and to discover more about what your options are for closing your company in 2022, get in touch today.