Closing a Company the Right Way
A lot of otherwise successful and profitable companies also close for a variety of reasons – not just based on their success.
We saw a good example this week when the stars of The Grand Tour – Jeremy Clarkson, James May, Richard Hammond and their producer Andy Willman – wound-up their production company Chump Holdings.
The third series of the show has just come to an end and even though a fourth is in production, it is being made by another production house.
Although Chump Holdings was formed purely as a vehicle (wa-hey!) to produce and deliver the episodes of the series, it still has to conform to various rules and regulations just like any other company.
They may have sadly waved goodbye to their audience and the tent in the last episode but you can’t do that with a business. There are various processes that have to be followed to avoid any future legal complications and consequences before driving off into the sunset for the time being.
The company is not in debt and has a surplus so they are able to apply to have the company struck off the Register of Companies or they could also consider a Members’ Voluntary Liquidation (MVL)
Having the company struck off is the cheapest way to conclude the firm’s business but there are certain stipulations that have to be met for this to happen. These are:
- The company hasn’t traded or sold anything in the three months before being stuck off
- The company hasn’t changed its name in the three month period
- The company is not threatened by liquidation
- The company is free from encumbrances with creditors
Once the business has been legally closed down then it can be struck from the Register.
Some business owners may be eligible for Entrepreneurs’ Relief which lets them pay less Capital Gains Tax when they sell or dispose of all or part of their business. It can be worth quite a lot of money as Entrepreneurs’ Relief is taxed at 10%.
This is the route Chump Holdings have gone down. After following the steps to close a company then the last thing to do will be to arrange the disbursement of available assets which in the case of Chump Holdings is the not insignificant amount of £28,927,645. That’s £7,231,911.25 each or take make it interesting maybe they should race for it?
If your company has taken a wrong turn or you feel like your own series of The Office has come to a natural end then come and have a free chat with us.
We can talk through all the options available, the pros and cons of each and let you decide which one you want to pursue to make sure everything loose end is wrapped up – including whether you want to have a sequel!