How Long Does It Take To Close A Company? Well, it depends on the procedure used to close the company. A period of time ranging from 3 months to a year or perhaps 2 would be typical. However, this is not a precise science so it takes as long as it takes and in some exceptional cases that can be years.
If the company can be struck off and does not need to go into liquidation then the company’s closure be quite quick.
A company that goes into liquidation will typically have to prepare to go into liquidation which involves the appointment of a liquidator. This can take time as there is a process of the company being accepted by the liquidator as a client due to money laundering regulations and customer identity checks before the liquidation process itself can start.
For further information about company closure generally please refer to our comprehensive guide how to close a limited company.
How Long Does A Voluntary Strike Off Take?
When a company is stuck off at Companies House there is no liquidator.
The process is initiated by the directors who can trigger it using a DS01 to strike of a company. Subject to being able to use the dissolution process, it can be a matter of filling in the DS01 and then leaving it to Companies House to issue a notice in the Gazette and within a few weeks the company will be closed.
Commonly a voluntary strike-off process will take around 3 months.
However, if a company does not immediately qualify for strike-off because, for example, it has traded within the last 3 months, then it may instead need to be closed through the use of the liquidation procedures.
There is a solvent liquidation procedure known as Members Voluntary Liquidation and an insolvent liquidation procedure known as Creditors Voluntary Liquidation.
How Long Does A Members Voluntary Liquidation Take?
If a company is solvent and it has £25,000 or more of assets then it can often take advantage of the tax efficiencies of going into Members Voluntary Liquidation so that the assets can be distributed by the liquidator. This can have attractive tax consequences for the shareholders as they are usually deemed to have received such a distribution as capital rather than income. This can result in favourable capital gains tax consequences, being taxed at 20% instead of at a higher rate via income tax. Furthermore, if a shareholder qualifies for business asset disposal relief they might even obtain a further 10% tax saving on the capital gain.
A Members Voluntary Liquidation procedure can be undertaken reasonably swiftly with a distribution made to shareholders of the assets within a period of around a month. There are no hard and fast rules about this as it will depend on the facts of the case. However, once a distribution has been made the shareholder directors will have minimal involvement in the company even if the liquidator takes a few more weeks or months to tie up any loose ends before formal closure and sending the company into dissolution.
However, if a company is insolvent then the process will usually be far longer as there is an additional group to consider ie. the creditors. The process of getting a company into Creditors Voluntary Liquidation is more involved.
How Long Does A Creditors Voluntary Liquidation Take?
Typically a company with debts will not be able to make use of the strike-off procedure, particularly if creditors object and want it instead placed into liquidation. This is not uncommon particularly if creditors are concerned about the conduct of the directors and want a thorough investigation of the company’s affairs by a liquidator.
As with a Members Voluntary Liquidation, once the company is placed formally into liquidation the shareholder directors will usually have minimal involvement in the company except for addressing investigation queries that might be raised by the liquidator. The process will for a typically small business take 6 to 18 months. It can however be far longer. Unlike a Members Voluntary Liquidation, a Creditors Voluntary Liquidation means the liquidator has to not only deal with creditors but also realise the assets to hopefully make a distribution to creditors after discharging the costs of the liquidation process. It is not unknown for disputes or difficulties to arise over a range of matters that can materially stretch out the process.
How Long Does A Compulsory Liquidation Take?
A Compulsory Liquidation is another way to close down a limited company.
Usually, this is a process initiated by creditors who are chasing unpaid debts but it can be triggered by shareholders.
Getting the company into liquidation can take a number of weeks and in some cases, months from the point in time that a creditor has served a winding up petition on the company, before a court makes the winding up order for Compulsory Liquidation.
Thereafter the process as with Creditors Voluntary Liquidation is somewhat unpredictable in terms of the timescale. For a typical small business, the process is likely to take something like 1 to 2 years but again the period can be far longer.
