Telling HMRC Your Company Has Stopped Trading: The Complete Close-Down Checklist

Companies House gets most of the attention when you close a limited company — the DS01, the Gazette notices, the £13 fee. But the organisation most likely to derail your closure is HMRC. There is no single switch marked "company stopped trading". Corporation Tax, VAT and PAYE are separate regimes, each with its own final filing, its own deadline and its own way of going wrong. Miss one, and HMRC — which is a creditor of your company and a frequent objector during the strike-off process — can hold up your dissolution until it is satisfied.

This guide is the complete checklist for telling HMRC your company has stopped trading: what to file, when to pay, what to keep, and what to do about employees. Work through it in order and the strike-off itself becomes the easy part.

Why there's no single way to tell HMRC

HMRC treats each tax separately, so closing down means closing down three times: a final Company Tax Return for Corporation Tax, a deregistration and final return for VAT, and a final payroll submission for PAYE. None of these happens automatically when you stop invoicing customers, and none of them is triggered by the strike-off application either.

Two procedural points are worth knowing from the outset. First, when you do file the DS01, you must give a copy to all interested parties — expressly including HMRC — within 7 days. Failing to do so carries an unlimited fine, and deliberate concealment carries up to 7 years' imprisonment. Second, Companies House publishes your strike-off application in The Gazette and holds it open to objections for a minimum of 2 months. HMRC routinely objects when tax returns are outstanding. The tidier your HMRC affairs, the quieter that window passes. (For the strike-off mechanics themselves, see our guide to voluntary strike-off and the DS01.)

Corporation Tax: the final CT600

Your company needs to file final statutory accounts and a final Company Tax Return (CT600) with HMRC, clearly stating that these are the final trading accounts and that the company will shortly be dissolved. Note the quirk: these final accounts go to HMRC, not to Companies House.

The standard deadlines apply. The return is due 12 months after the end of the accounting period, and Corporation Tax is payable 9 months and 1 day after the period ends. In practice, you should not wait for either deadline — settle the Corporation Tax bill before you apply for strike-off, because an unpaid bill makes HMRC a creditor with every reason to object.

Terminal loss relief

If the company made a loss in its final period of trading, claim terminal loss relief on the final return. It lets you set that closing loss against earlier profits, which can produce a Corporation Tax refund. Claim it promptly and make sure any refund is paid out before dissolution: money HMRC sends to a company that no longer exists — including refunds that arrive after the company is struck off — passes to the Crown as bona vacantia, and getting it back means restoring the company to the register. A refund cheque addressed to a dissolved company is a surprisingly common, and entirely avoidable, casualty.

A note on taking the money out

Before the company is dissolved, distribute what is left to shareholders and close the bank account. How those distributions are taxed depends on the amount: on a strike-off, distributions only get capital treatment if the total is £25,000 or less — above that, the whole amount is taxed as income. If your retained funds exceed £25,000, a members' voluntary liquidation usually works out considerably cheaper in tax, even after the liquidator's fee. We cover the comparison properly in strike-off vs MVL.

VAT: deregister within 30 days

If the company is VAT-registered, you must cancel the registration within 30 days of ceasing to make taxable supplies. Miss the window and you risk a penalty. The clock starts when you stop trading, not when you get around to the paperwork.

• How to cancel: online through your VAT account if the company has simply stopped trading. Form VAT7 by post is required in specific cases — liquidation, a change of legal status, or disbanding a VAT group.
• Confirmation: HMRC can take up to around 40 working days to confirm the cancellation. Carry on filing returns until it does.
• Final return: you submit one last VAT return covering the period up to the effective cancellation date.

The £1,000 stock and assets rule

On that final return, you must account for VAT on any stock and business assets still on hand — laptops, equipment, unsold inventory — if you reclaimed (or could have reclaimed) VAT when you bought them and the VAT due on them comes to more than £1,000. Below that threshold, nothing is due. It is an easy line to miss, and exactly the sort of thing HMRC notices when reviewing a deregistration.

Keep your VAT records for 6 years after cancellation.

PAYE: close the scheme and issue P45s

If the company runs payroll, tell HMRC straight away when you stop employing people. The mechanics are brief but precise:

1. Run the final payroll, including any outstanding wages and accrued holiday pay.
2. On that final Full Payment Submission (or Employer Payment Summary), tick "Final submission because scheme ceased" and enter the date the scheme ceased.
3. Pay any outstanding tax and National Insurance within 17 days (14 days if paying by cheque).
4. Enter leaving dates in your payroll records and give every employee a P45 on their last day.

That is the entire PAYE close-down. It takes an afternoon — but skipping the "scheme ceased" flag leaves the scheme open, which means HMRC keeps expecting submissions and starts issuing penalties for returns you never knew you owed.

Employees: redundancy pay and the HR1

Closing the company is a fair reason for redundancy, but it does not exempt you from following a fair process — reasonable time off to look for work, proper notice, and consultation where required.

Employees with 2 or more years' continuous service are entitled to statutory redundancy pay, calculated by age and length of service:

Age during service	Entitlement per full year
Under 22	0.5 week's pay
22 to 40	1 week's pay
41 and over	1.5 weeks' pay

Two caps apply at current rates: weekly pay is capped at £751, and the maximum statutory payout is £22,530 (service is counted up to a maximum of 20 years). These figures uprate each 6 April, so check the current rates if you are reading this later. Statutory notice is 1 week after a month's service, rising by a week per year of service to a maximum of 12 weeks.

20 or more redundancies: collective consultation and form HR1

If you propose 20 or more redundancies at one establishment within 90 days, collective consultation rules apply: at least 30 days before the first dismissal for 20–99 redundancies, and at least 45 days for 100 or more. You must also notify the Redundancy Payments Service in advance on form HR1. Failing to file the HR1 carries an unlimited fine, and skipping consultation exposes the company to protective awards at tribunal. For a venture-backed company winding down a real team, this is the part of the checklist that most needs doing early rather than last.

What records to keep — and for how long

Dissolving the company does not dissolve your record-keeping duties. The headline rule from the gov.uk strike-off guidance is 7 years; the supporting rules vary by record type:

Record type	Retention period	Notes
Business records after strike-off (bank statements, invoices, receipts)	7 years after the company is struck off	The gov.uk rule specific to dissolved companies
Accounting records generally	6 years from the end of the financial year	Longer if transactions span periods, a return was filed late, or HMRC has an open compliance check. Failures risk a £3,000 fine or director disqualification
VAT records	6 years after deregistration
PAYE records	3 years from the end of the tax year
Employers' liability insurance certificate	Keep indefinitely	Former-employee injury claims can surface decades later

A single archived folder — digital is fine — covering the last 7 years of statements, invoices and the insurance schedule costs you nothing and saves a great deal of difficulty if HMRC or a former employee comes asking.

The alternative: telling HMRC the company is dormant

If you have stopped trading but are not certain it is forever — you might revive the brand, or there is a contract that could come back — you do not have to dissolve anything. You can make the company dormant instead.

For Corporation Tax, a company is dormant if it has stopped trading and has no other income, including investment income. Tell HMRC, file a final CT return if one is due, and after that no further Corporation Tax returns are needed unless HMRC issues a notice asking for one. The company stays on the register, the name stays protected, and dormancy can continue indefinitely.

Dormancy is not free of obligations, though. You must still file annual dormant accounts and a confirmation statement (£50 if filed digitally) at Companies House each year. If the company is VAT-registered, deregister within 30 days if you are not planning to restart, or file nil returns if you are. Close the PAYE scheme if you will not employ anyone again this tax year. We cover the trade-offs in our guide to making a company dormant.

The checklist, in order

1. Stop trading and note the date — several deadlines run from it.
2. Handle employees first: consultation and HR1 if 20+ redundancies, statutory redundancy pay, notice, final wages and holiday pay, P45s.
3. Close PAYE: final FPS/EPS marked "scheme ceased"; pay tax and NI within 17 days.
4. Deregister for VAT within 30 days of ceasing taxable supplies; file the final return, remembering the £1,000 stock and assets rule.
5. File the final CT600 and accounts with HMRC, marked as final; claim terminal loss relief if applicable; pay the Corporation Tax (due 9 months and 1 day after the period ends, but sooner is safer).
6. Distribute remaining assets and close the bank account — anything still owned at dissolution, including late HMRC refunds, goes to the Crown as bona vacantia.
7. Apply for strike-off (DS01, £13 online), copy the application to HMRC and all other interested parties within 7 days, and wait out the roughly 2-month Gazette objection window — about 3 months in total from filing.
8. Archive your records for 7 years.

None of this is intellectually difficult, but the sequencing matters and the deadlines do not negotiate. Plenty of directors handle the whole thing themselves with nothing more than the gov.uk pages and some patience — if your company is small, debt-free and never employed anyone, you may well not need to pay anybody anything beyond the £13 filing fee.

If you would rather not hold the sequence in your head, our free route-check tool tells you in a couple of minutes which closure route fits your company and which of these HMRC steps actually apply to you. And if you want the filings sequenced, drafted and tracked for you, that is what the Guided Wind-Down is for.