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Rejection of the company closure can be frustrating. However, there are many reasons why the HM Revenue & Customs (HMRC) may reject the closure of a private limited company.
When you decide to close down a company, it is essential to understand the procedure and acceptable circumstances for it not to be rejected. What to do if the closure of a private limited company is rejected? Read the article to find out how you can handle HMRC rejection.
When to apply for the closure of a private limited company
The first thing to understand before applying for company closure is to ensure the company has not traded for the last 3 consecutive months. The other things to know before applying for company closure include;
- Pay all outstanding debts
- No selling of stock in the last 3 months
- No change of name in the last 3 months
- No ongoing legal or insolvency proceedings
- All outstanding taxes and commitments are paid
Why might a company’s strike-off application be rejected?
The company may be rejected by HMRC under several circumstances
The creditor has rejected the application
Once you apply for the company closure, Companies House publishes notices of intended strike-off in the Gazette for objections from interested parties like creditors. If your company owes money to creditors, they have the right to reject the closure.
The aim of rejecting company closure is for creditors to keep the company active on the public register to pursue the debts owed.
Active insolvency procedure in process
If HMRC finds out that the company is going through a formal legal process due to a lack of financial obligations to pay creditors, the closure may be rejected. The rejection will allow the procedure to be followed to its conclusion.
Change of name in the last three months
If a company has changed its name in the last three months after applying for closure, the process will be rejected. If you wish to continue with the company closure after rejection, you can do so after three months have elapsed for the process to be accepted.
Incorrectly submitted application
A company closure application may be rejected if submitted incorrectly. Once rejected, you can reapply and ensure all information is accurate.
Bearer shares in issue
If the company’s bearer shares are in issue, and it applies for dissolution, the application may be rejected. Apart from rejection in company closure, the company can face legal issues or cancellation of shares since they were abolished in 2015.
Actively traded in the last three months
To close a company, the legal name must not have been changed in the last three months before the application. If the name has been changed, you will need to wait for the three months to elapse to apply for company closure.
What to do if the company closure application is rejected?
Once the company closure application is rejected by HMRC, it is essential to first review the rejection notice to understand the reasons and follow the instructions given. The steps to follow include;
Understand the reason for rejection
The application may be rejected by HMRC and Companies House. Once rejected, they send the rejection notice stating the reasons for rejection.
Address the cause
After getting the rejection notice, the next step is to address the cause by resolving the issue mentioned in the notice. If the reason is outstanding debts, you will need to settle the debt before reapplying for the company closure.
For recent trading or name change, you will have to wait for the three months to elapse to reapply for the company closure. As for incorrect application, you can immediately reapply for the closure, but ensure the details are correct and up-to-date.
Consider insolvency options
If the rejection was due to outstanding debt and you are not able to pay, you can consider the insolvency options. If you consider this, ensure to seek advice from a licensed insolvency practitioner to guide you through the process, which may involve Creditors Voluntary Liquidation (CVL) or Member Voluntary Liquidation (MVL).
How Icon Offices can help
Through our company closure and dissolution service, you get to relax as we handle the closure process from beginning to end. With our services, you do not expect a rejection because we do due diligence to ensure the company is eligible to go through the dissolution process.
For any issue or question Companies House may have, we handle it on your behalf. For our new customers, we allow them to use our virtual office as a registered address for free to receive correspondence during the dissolution process.
Contact us today to guide you on how to go about your limited company closure at [email protected].
