Cheap way to close or liquidate a limited company?

What is the cheapest way to close or liquidate a limited company? 

If you’re thinking about closing down your limited company, whether that’s because it’s under financial pressure or that it simply serves no further purpose, you may be wondering how you can liquidate or close the company in a quick and cheap way. 

Cost is clearly an important factor, and you may be wondering is there are any cheap ways to close or liquidate a limited company quickly. There are, but you need to factor in all the rules and regulations of eligibility when deciding how to close it down, and also your statutory obligations as a director.

Cheap and quick liquidation for solvent companies

Members’ Voluntary Liquidation (MVL)

If your company is solvent, a Members’ Voluntary Liquidation (MVL) may be a good option. It’s a solvent liquidation procedure that’s carried out by a licensed insolvency practitioner (IP). While there are professional fees attached to the process, there are also significant tax advantages in using an MVL. The potential tax savings that can be made can eclipse the cost of the MVL, effectively making this a cheap liquidation option in the right circumstances. 

Company dissolution

Another possible method of cheap company closure is company dissolution, which involves striking the company name from the Companies House register. There are potentially significant drawbacks, however. Your company could face reinstatement to the register if you fail to notify all creditors, for example, and you don’t have the reassurance that involvement from a licensed professional brings.

Cheap and quick liquidation for insolvent companies

If your company is insolvent you may be tempted to close it down as quickly, and as cheaply as possible, but it’s important to also consider your legal obligations as a director during this time. If you don’t adhere to the strict insolvency laws in the UK, you could face personal liability for your company’s debts and potential disqualification from acting as a director in the future.

The company dissolution process we mentioned earlier isn’t suitable for insolvent companies, and you could face investigation as a director if you take this route when your company owes money. Creditors can make a formal objection to dissolution – HMRC in particular, are known to do this quickly if they’re owed money – and you might be forced into compulsory liquidation as a result.

Creditors’ Voluntary Liquidation (CVL)

The best way to close down a company with debts is to enter Creditors’ Voluntary Liquidation. This places the interests of creditors first, and reduces your risk of being held personally liable for company debts. 

If your company is insolvent, liquidation is the only possible option. This can be seen as a cheap option if the company has sufficient assets as all the liquidation fees will be taken from these rather than you or your fellow directors having to pay personally.

If you’re an employee of your company, you may also be able to claim statutory redundancy if you enter a CVL and meet certain conditions. This money could then be used to fund the CVL.

Seek professional advice on cheap and quick liquidation

Closing down a limited company in a cheap and quick way is possible, even when it has debts. You just need to take care to follow insolvency regulations and act quickly with the best interests of creditors in mind.

The best way to do this is to seek professional insolvency help at the earliest signs of impending insolvency. 

UK Liquidators is a partner-led company of licensed insolvency practitioners with more than 25 years’ experience. We’ll provide the reliable advice you need, and operate from a network of offices around the UK. Please contact one of the team to arrange a free same-day consultation.