Close Menu
UK Liquidators

Should I strike off or liquidate my company?

Low-Cost Liquidation
100% Confidential
Stop HMRC & Creditor Pressure
Partner-led Service

If your limited company has no debts, you can close it down either by striking it off the register at Companies House or using a formal liquidation procedure. Voluntary strike-off, also known as dissolution, places the responsibility for closing down the company firmly with yourself and other directors.

Voluntary liquidation, on the other hand, is an official process undertaken by a licensed insolvency practitioner (IP). The cost of liquidating is considerably more than strike off, but there can be serious ramifications if you try to strike off your company and don’t meet the stringent requirements. 

So looking at voluntary strike off first, what are the eligibility criteria you need to meet to ensure you aren’t at future risk of either disqualification as a director or personal liability?

Eligibility requirements for voluntary strike off

There are specific requirements that you need to meet before you can strike your company off the register at Companies House. Briefly, these are:

  • Ceasing trade and other business activities for three months prior to strike off, apart from those required to wind up the company
  • Not changing the company name during the three months leading up to strike off
  • Being solvent, with no threat of liquidation present

The last point is particularly important when you’re striking off your company, as this method of closure is for solvent businesses only. If you attempt to strike off a company that owes money, you could face allegations of misconduct and even personal liability for the debts involved.

Worried about your Bounce Back Loan?

If you are a limited company director worried about how you are going to repay your Bounce Back Loan, we are here to help. As licensed insolvency practitioners we can talk you through your options when it comes to repaying your outstanding Bounce Back Loan, as well as handling all negotiations with creditors on your behalf. Call our team today on 0800 063 9262 .

Do the disadvantages of strike off outweigh the benefits?

There are some advantages to voluntary strike off when compared with liquidation. It’s inexpensive, and can be a quick way to close your company, but the potential disadvantages may outweigh the benefits.

Cons of voluntary strike off

  • Creditors can oppose a strike off – HMRC are known to quickly oppose such a move if you have tax debts, and will then attempt to force your business into compulsory liquidation.
  • Directors must ensure all creditors are informed - the company can be reinstated for up to 20 years after closure if a creditor subsequently makes a claim. It would be treated as if strike off hadn’t taken place, and your conduct as a director would be investigated.
  • Directors face serious repercussions if the company is insolvent, including personal liability and disqualification for up to 15 years.

Solvent liquidation

Members’ Voluntary Liquidation (MVL) is a formal procedure whereby the business is wound up by a licensed insolvency practitioner. Again, the company must be solvent to be eligible for this process, and you sign a formal Declaration of Solvency in this respect.

This means you believe the company can repay all its debts, plus interest, within 12 months of closure. A licensed IP carries out the procedure and ensures you meet all your statutory obligations as a director, so minimising the potential for problems in the future.

Insolvent liquidation

If the business is found to be insolvent, another form of voluntary liquidation can take place. Creditors’ Voluntary Liquidation (CVL) also offers benefits to yourself and other directors, as you may be able to claim statutory redundancy pay.

The average claim for director redundancy is £9,000, which would help to pay for the process if necessary, or perhaps repay some of the company’s debt. It could also be used to support your own personal finances.

Strike off or liquidation?

To answer the question, “Should I strike off or liquidate my company?” you need to consider what would happen to existing debts. If you can’t repay them and try to strike off the company, the application would be challenged. Furthermore, if a creditor files a claim for a debt in the future, the company will be reinstated.

When you liquidate a company, if it’s insolvent, any unpaid debts that remain are officially written off so there’s no chance of being held personally liable for them in the future. The business is closed down in an orderly manner when you opt for solvent or insolvent liquidation, and you gain the support of a licensed professional.

Start your online liquidation today

If you have decided liquidation is the right option for your limited company, you can take the first step and begin the process online using our online portal. Starting the process is quick, simple, and can be done at a time that suits you. Your information will be submitted to your local UK Liquidators insolvency practitioner who will be with you every step of the way. Click here to start your company’s liquidation online.

Liquidation and director redundancy

One of the most significant benefits of entering liquidation rather than trying to strike off an insolvent company is the potential for directors to claim redundancy pay. Briefly, you must have worked under a formal contract of employment for at least two years, and received a regular salary under PAYE.

Our expert team at UK Liquidators has more than 25 years’ experience of helping directors voluntarily liquidate their companies. We can provide more detail on director redundancy and your potential eligibility, and guide you on the best way to close your company. We operate a wide network of offices around the country – please contact one of the team to arrange a free same-day consultation.

Jonathan Munnery
Insolvency & Restructuring Expert

If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.

Is liquidation the right option for you?

Take our 60 second test and find out

Company health risk assessment
Types of liquidation available
Alternatives to liquidation
Understand your next steps
60 Second Liquidation Test
Did you know?
Are you eligible to claim Director Redundancy?
As a Limited Company Director you may be entitled to claim Director Redundancy - Average UK claim is £9,000*.
Pages related to Should I strike off or liquidate my company?
Stressed Woman With Business Problems
Closing a limited company
Business Finance
Cheap way to close a limited company?
Calculator Tax
How to close a limited company without paying tax
Ready to Liquidate?
Express Liquidation Service
Ready to start liquidating today? Complete the form and a member of our team will be in touch.
Please note: By completing this form you are not liquidating your company
Contact the UK Liquidators Team

If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.

  • Free initial consultation
  • Strictly confidential
  • Fully licensed insolvency practitioners
  • Local office support
  • Named case handler throughout
Logo Tma
Logo Business Recovery
Logo Cse
Logo Iip

Looking for immediate support?

Complete the below to get in touch

 
 
 
 
 
100% Free & Confidential Advice

This site uses cookies to monitor site performance and provide a more responsive and personalised experience. You must agree to our use of certain cookies. For more information on how we use and manage cookies please read our PRIVACY POLICY