It is possible to close your business and walk away but the process very much depends on whether your company is insolvent or not.
Dissolution
If your company has minimal debts, or assets, and you just need to move on to another job, for instance, then you can apply to have your company removed from Companies House. This process is known as dissolution or striking off. It is a relatively simple procedure in that the company must have not traded for 3 months and you send a form (DS01) to Companies House along with a payment of £40. Anyone then has 3 months to lodge an objection to the company being removed from the register. If anyone is owed more than a few hundred pounds then they may well object. HMRC will object if they are owed more than £2000
Creditors Voluntary Liquidation
So, if your company has debts then the best way to close it down is via a Creditors Voluntary Liquidation (CVL). Put simply you will need to instruct a Licensed Insolvency Practitioner who will start the process of liquidation.
The liquidator will inform the creditors of the company that it cannot pay its debts and it will seek to turn any assets into cash. The liquidator will investigate the reasons for the failure, the actions of the directors, and report to the relevant authorities. The company will then be removed from the Companies House Register. As this is an insolvency procedure any employees of the company will be entitled to arrears of pay and redunancy costs paid from the Redundancy Payments Office. A CVL costs from £4000 + VAT.
If you or your company are unable to pay the fees then it is best to write to the creditors and explain the situation. They may then seek to wind up the company via a compulsory liquidation.
Members Voluntary Liquidation
If you company has significant assets or cash ie in excess of £25,000 then it would be wise to close the company down via a Members Voluntary Liquidation (MVL). There is nothing to stop you just taking the money out and closing it via a dissolution but this is not tax efficient as any drawings will be classed as income as opposed to capital. The process of an MVL is very similar to a CVL in that a licensed Insolvency Practitioner will need to be appointed to liquidate the assets of the business and distribute the proceeds to the members. The director/directors will need to swear a declaration that the company is solvent.
Remember that if you, as a director, have not acted appropriately then it might be difficult to walk away from any business venture by just closing down the company. If you are worried then it is important to seek advice.
