The following is for general information purposes only. All further queries regarding this information should be directed to the competent authorities listed below.
Detailed below is an overview of the administrative procedures involved when closing a business in Ireland.
If you are a sole trader the process is quite straightforward. You simply cease trading and inform your clients and suppliers that you are no longer in business. You need to retain financial and other records for 6 years following closure.
If you use a business name you must inform the Companies Registration Office that you have ceased trading within 3 months. You do this using Form RBN3.
If you owe debts to creditors you are personally responsible for those debts. Read more about debt issues and self-employed people on selfemployedsupports.ie.
If your business is incorporated as a company you may wish to close it due to retirement or another personal reason. Liquidation is the process of winding up a company so that it no longer exists by using its assets to pay its debts. A liquidator is the person appointed to wind up the company and whose principal function is to dispose of the company’s assets, pay or settle its debts and distribute any surplus to its members. When a company is in liquidation, the liquidator usually takes over the powers of the directors. There are 2 types of voluntary liquidation as follows:
Members’ voluntary liquidation: This is when the members of a company that can pay its debts decide to wind it up. Part of this process is that a majority of the business directors must make a declaration of solvency. This declaration means that they have enquired into the affairs of the company and believe that it would be able to pay its debts within a certain period.
Creditors’ voluntary liquidation: This is when a company is unable to pay its debts when they are due. Sometimes this happens when a members’ voluntary liquidation is converted into a creditors’ voluntary liquidation. In other cases, it is when the members of a company decide that the company’s debts are such that it should be dissolved as a creditors’ voluntary liquidation.
Involuntary liquidation means that a company is wound up by the court. This happens mainly at the initiation of any member or creditor of the company. In some circumstances, it can happen by order of the Minister for Jobs, Enterprise and Innovation. The court appoints the liquidator and supervises the liquidation process.
A receiver may be appointed by the court or when a loan agreement is being enforced. The receiver is appointed to take control of the assets of the company which have been used to secure a loan, such as a mortgage. Where a loan is secured on certain company assets the receiver sells these assets on behalf of the lender.
If a company goes into examinership, it means that the company's financial health is ailing, but that the company is still potentially viable. An examiner is a person appointed to a company by the Court to assess the company’s position and prepare a rescue plan for the company.
You can find more details in this information booklet (pdf) published by the Office of the Director of Corporate Enforcement. There are lists of insolvent companies in liquidation on the website of the Office of the Director of Corporate Enforcement.
Please find links to relevant information on the procedures required for tax concerning closing a business, on the Office of the Revenue Commissioners website below.
Cancelling a VAT registration number
A person ceasing to trade should notify their Revenue District in order that the VAT registration number may be cancelled promptly. This is important to note, otherwise return forms and demands for estimated VAT liability will continue to issue automatically.
Revenue will also cancel a person's VAT registration if they have been registered in error, or they have ceased to be an accountable person. In certain circumstances a cancellation of registration will give rise to recovery by Revenue of the net VAT repaid to the person during the period of election.
Full details are available here:
Cancellation of Registration
When a business is closed or transferred, the law protects the rights of employees in these circumstances.
If you no longer require the services of some of your employees (because you are in financial difficulties or you are reorganising your firm) you may need to make them redundant. You must ensure that fair procedures are followed which include fair selection criteria, giving the employee at least 2 weeks’ notice and paying the redundancy payment due to the employee on the date of dismissal. Your employees may be entitled to bring a claim for unfair dismissal if they consider that they were unfairly selected for redundancy or consider that a genuine redundancy situation did not exist.
The Insolvency Payments Scheme is a scheme set up to pay certain outstanding entitlements concerning the pay of an employee where employment has been terminated. This is only in the instance of employer's insolvency.
The Protection of Employment Act 1997-2007 provides that where employers are planning collective redundancies, they are obliged to supply the employees' representatives with information. They must inform the representatives of specific information regarding the proposed redundancies and to consult with those representatives at least 30 days before the first dismissal takes place. This is to see if the redundancies can be avoided or lessened or their effects can be mitigated.
In addition the Employees (Provision of Information and Consultation) Act 2006 (pdf) requires employers of 50 or more people to consult with employees on substantial changes in the workplace, including proposals for collective redundancies.
Redundancy Payments Scheme
All eligible employees are entitled to a statutory redundancy payment when they are made redundant. If you pay the statutory redundancy entitlement and give proper notice of redundancy to your employees in 2012 you are entitled to a 15% rebate from the Social Insurance Fund (SIF). There will be no statutory redundancy employer rebate where the date of dismissal due to redundancy is on or after 1 January 2013.
Transfer of business
The European Union has created some regulations to safeguard employees' rights on transfer of undertakings. These safeguards are in place in Ireland and provide that the rights and obligations of the original owner arising from an employment contract relationship existing at the date of transfer shall by reason of such transfer, be transferred to the new owner (the transferee).
Please find relevant links below.