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How do I Inform HMRC of Business Closure?

How do I Inform HMRC of Business Closure?

If you are going to close your business due to insolvency or you are no longer trading, you must inform HMRC immediately. In this blog, we discuss the steps required to inform any necessary parties, including HMRC. 

To inform HMRC of a business closure, you must send them a letter with your intentions, along with a letter from stakeholders. You must then inform any employees, send off your final expenses and benefits, and decide how company assets will be distributed to directors.

Read on to find out more about announcing business closure including who you need to inform.

What Do You Need to Do When Your Business Closes?

When you close your business, there are certain actions you need to take, including informing HMRC. You can do this by sending a letter informing HMRC that you intended to strike off your business, along with a letter from any stakeholders that confirms they are aware of the situation.

Before you can strike off your company with HMRC, you must make sure that the appropriate people are informed. This includes any interested parties (investors, stakeholders, creditors etc), employees and any directors that did not sign the strike off application.

Employees

You must tell HMRC as soon as possible once your business stops employing staff. For employees, they must be treated correctly according to the rules if you intend to make them redundant and pay their final wage or salary. The rules of redundancy include:

  • Employees must be selected in a fair way for redundancy – if your business is closing then the job no longer exists so this is considered a fair reason
  • You should be transparent about the reason for redundancy

Payments

You also need to close your PAYE scheme by submitting a final payroll return, deducting and paying any National Insurance and tax to HMRC within 17 days. Other steps that need to be completed when employees leave are:

  • Entering a final date on your employee’s payroll record
  • Providing a P45 for employees on their last working day
  • Sending expenses and benefits forms to HMRC
  • Keeping records of employer’s liability insurance policy and schedule for 7 years after the company is struck off

Assets

Any assets the company owns must be shared with the shareholders before the strike off is complete. If there are any assets left when the company is struck off, these will go to the Crown, including any payments received in the future. To retrieve these payments, the company would have to be restored. 

How Do You Withdraw Your Application to Strike Off?

If the situation with your company changes and you no longer wish to strike it off, you can withdraw your application. Companies House must be notified immediately after the company directors change their minds. Especially in any of the following circumstances:

  • Your company continues trading
  • You change the name of your company
  • You dispose of any property or rights necessary to continue trading
  • The company becomes insolvent through formal proceedings

To inform HMRC, there is a DS02 form on the website to fill in which can cancel your application to strike off your company. This form can either be filled in on the government website or by printing it off and filling the form in by hand and posting.

Licensed Insolvency Practitioners at Restart BTI

If you need to strike off your business with HMRC, working alongside a licensed insolvency practitioner can ensure that your company follows all of the necessary steps. Our experts can guide you through the process, leaving your business directors in the best possible position. Contact a member of our team today to see how we can help. 

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