DS01 Forms: Our GuideJune 5, 2021
Closing a limited company can be stressful for lots of reasons - and the paperwork can feel overwhelming, particularly if you're winding up an owner-managed business and navigating the process single-handedly.
The Companies House DS01 form is one of the key documents you'll usually need to submit.
Here, we'll explain what a DS01 is, how to complete it, and in which scenarios this is the appropriate paperwork to refer to.
If you're unsure whether a DS01 is suitable in your circumstances or are struggling with any element of closing a company, please get in touch with the Hudson Weir team!
Do I need to complete a DS01 Form for a limited company closure?
First, let's clarify when you will require a DS01. A lot depends on why you are winding up an incorporated company - for example:
- Winding up due to insolvency
- Closing a business voluntarily
- Facing liquidation following a creditor's petition
- Striking off your company due to a cessation of trading
A DS01 form is a document you complete, either manually or online, and submit to Companies House.
In essence, it informs the registry that you are dissolving the business.
However, it's not always the correct option. For instance, Companies House will publicise your application to strike off the company, and other stakeholders can object.
When a business is dissolved, it is no longer a legal entity and cannot be pursued to repay debts.
Therefore, it isn't as simple as filing a DS01 if a company has become insolvent, as a creditor would have the right to object if the company owes them funds.
When is a DS01 Companies House form required?
DS01 forms are best suited if:
- Your business is no longer trading
- The limited company isn't in use
- You want to formalise the closure of a business
In an insolvency situation or liquidation, you won't file a DS01 form.
Instead, the most common process is to begin the Creditor's Voluntary Liquidation process (CVL).
That means an accredited liquidator will manage the company closure on your behalf and pay back any debts where possible from company assets.
Note that outstanding creditors can petition for a dissolved company closed via a DS01 form to be reinstated.
Businesses need to send a copy of the DS01 form to any interested parties within seven days of the submission. That includes any non-signatory directors, staff, shareholders, creditors and pension fund managers.
If you take on any new member of the company or a new creditor, they are entitled to receive a copy within a week.
Failing to send a copy of the DS01 form can mean a criminal prosecution and steep fines and delay the company's closure.
Who can submit a DS01 company closure notice?
Filling in the form itself is relatively simple. However, if you have multiple directors, you'll need over 50% to sign the form for Companies House to accept it.
Otherwise, the requirements are:
- Pay the filing fee of £8 (you can do this online when submitting the form)
- Sign in to, or create, a Companies House account
- Provide the company registration number and authentication code
- Include an email address for every signatory on the DS01
- Pay either through a credit or debit card or via a Companies House payment account
If you have been instructed to file a DS01 form, provided you have the appropriate authority and login details as a business representative, you can file this along with the requisite directors’ signatures.
What do I need to do before applying to strike off a limited company?
There are processes you'll need to follow to file a DS01. It's crucial to follow each step to ensure you're not breaching any aspect of company law.
Here are the essential tasks to tick off before you submit your DS01:
1. Staff and redundancies
Of course, you can't close a business that employs staff without finalising their wages or going through the redundancy regulations.
That means ensuring all final wages have been paid and checking the applicable legislation for a redundancy scenario; this will depend on the business size and number of employees.
2. Accounts and taxes
Companies House may not strike off a business with outstanding tax returns. Therefore, you'll need to prepare your final set of accounts, along with the relevant company tax return.
That submission should indicate that you anticipate dissolving the business shortly, so they know the documents are final accounts.
You'll need to pay all of your taxes up to date, including PAYE, National Insurance, Corporation Tax and anything else outstanding.
After making these payments, you need to ask HMRC to close the payroll scheme and apply to deregister for VAT.
3. Ownership and management
Finally, the company must follow its governing articles. The business should share any assets between shareholders - anything that isn't will effectively be treated as abandoned.
Your final board meetings must be minuted, with confirmation that any debts have been settled or will be before the DS01 is submitted.
There will also be some admin tasks, such as closing bank accounts and transferring any domain names you own for the business website.
What happens if someone objects to my DS01 winding up form?
As we've mentioned, a DS01 isn't always a suitable option - and if you have outstanding debts, it's pretty likely a creditor will object.
From their perspective, if you successfully strike off the company, their debt is written off, and they have little recourse to claim any repayments.
Therefore, it's vital to consult an experienced insolvency practitioner like Hudson Weir if you're facing an insolvency situation.
Filing a DS01 is not a solution to avoid liquidation.
On the contrary, it can sour relations with creditors if they suspect it is an attempt to circumvent their right to stake a claim on the proceeds of any business asset sales.
It is also an offence to file a DS01 without following the correct process - we'll cover this in more detail below. Still, it's vital to emphasise that this route is only permissible in the right circumstances.
What if I file a DS01 form incorrectly?
It's crucial to seek professional advice if you have any doubts about whether a DS01 application is a suitable approach for your business.
Unfortunately, some directors can try and use this route to avoid insolvency. However, this directly impacts creditors' rights, who are owed money by the business.
A new bill called the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill aims to tackle this. It gives more powers to the Insolvency Service to investigate if they think a company has been dissolved incorrectly.
This change to legislation has come about due to concerns in the government that companies may have used DS01 forms fraudulently to avoid paying back pandemic support loans.
In brief, the bill will:
- Prevent any director from dissolving a business and then creating a 'phoenix company' - usually leaving creditors, including HMRC, with unpaid debt they can't reclaim
- Impose severe sanctions for breaches, with directors being disqualified for up to 15 years
- Reinforce the power of the Insolvency Service to investigate. They are already able to look into practices of live companies, directors, and companies entering into any form of insolvency. The same 15-year sanctions can apply if they identify any wrongdoing
These new measures are retrospective; this means that any company that took out a Bounce Back Loan and then filed a DS01 form leaving debts outstanding can be investigated.
Hence, it is vital to seek professional advice if you're in any doubt about whether to proceed with a submission.
If you'd like more information on closing a limited company, contact us today - we're happy to help!