Directors who want to close a limited company will often want to do this in the quickest, easiest, and most cost effective way and so they may wonder if this is possible without engaging the services of a liquidator.

Wind Up Business Liquidator

However, the only way you can do this is to strike off a company from the Companies House register and around two months later, the company is then dissolved – [1]GOV.UK “Liquidate your company. You do need to be aware though that this option is only available to those who meet specified conditions, and in particular, are solvent.   

Most importantly, if you are not eligible to do this, you could be subject to some severe penalties, which have been amplified by a recent change in the law. The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act – [2]LEGISLATION “The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies Act –  means that those directors who dissolve their companies to avoid paying creditors and their employees will face investigation by the Insolvency Service. This has had its powers extended so it can now probe directors of dissolved companies and impose disqualifications for up to 15 years, as well as prosecute.

Notably, if you want to close a business because there are debts that cannot be paid, you will need to find a licensed insolvency practitioner to liquidate your business. 

Can I Liquidate a Business Myself if it is Solvent?

So the key to whether you can wind up a business yourself is whether it is solvent, meaning you are able to settle debts or have assets that exceed liabilities. The process involves completing form DSO1 from the government website and paying a £10 fee. Subject to no objections, the strike-off will be approved with dissolution to follow.

Striking off is the simplest and cheapest option and does not require a liquidator. However, directors do need to follow the correct procedures, which include informing HMRC, ensuring any staff is treated according to employment law and that all their company filing is up to date.

You can strike off a limited company and dissolve it providing:

  •         It has not traded or sold any stock in the last three months
  •         It has not changed names in the last three months
  •         It is not threatened with liquidation
  •         It does not have any agreements with creditors, such as Company Voluntary Arrangement. 

Meanwhile, if your business has significant assets, of at least £25,000, you may wish to choose a Members’ Voluntary Liquidation. This is a form of solvent liquidation and can offer significant tax advantages, but it does require a liquidator to oversee the process. 

Do I Need to Appoint a Liquidator if my Company is Insolvent?

The short answer to this is yes – you will need to find and appoint a licensed insolvency practitioner to act as the liquidator of your business. They will take over the running of the company while it is wound down, and their role includes dealing with creditors and employees as well as having assets independently valued – these will be sold off to pay creditors. 

What are the Options with an Insolvent Liquidation?

In terms of liquidation of an insolvent business, there are two options. This can either take place via a Creditors’ Voluntary Liquidation or it can be wound up via the courts on a compulsory basis.

A Creditors’ Voluntary Liquidation (CVL) is generally chosen when recovery is not possible and there is a need to bring an orderly closure to the business. The business will have been deemed to be insolvent, typically because of cash flow problems.

There are clear benefits to a CVL over a compulsory liquidation because it provides directors with more control over the process. They should be able to start the process earlier compared to a court winding up and directors can appoint a liquidator of their choice. At least 75% of shareholders need to agree to a CVL and the insolvency practitioner will ensure the necessary steps are taken to deal with any employees and creditors and to close the company.

A compulsory winding up is the other option, which is winding up via the courts –  while there was a temporary moratorium on this because of the pandemic,  creditors can take this action again, although the debt owed now needs to be at least £10,000 compared to the earlier figure of £750. A winding-up petition is a court order to forcibly shut down a business and is a method generally used when the creditor has exhausted all other means to obtain payment and also issued the company with a statutory demand.

A liquidator is used to take over the company and sell off assets, but they are appointed by the court rather than the directors and are known as the Official Receiver.

Although both a CVL and a compulsory wind-up result in the company being closed, having the court shut down a company can be more damaging. So, directors are completely shut out of the process in terms of timings and influence and it can also be more harmful in terms of reputation – it can show a lack of control and director responsibility.

In all cases, the liquidator is required to investigate directors’ conduct to determine why the business failed. In many cases, directors will not be at fault and there were no means available to save the company and repay creditors. However, they will also see if there is evidence of wrongful trading or fraud, and instruct the Insolvency Service to undertake a more detailed investigation if necessary.

What if I’m Unsure About the Closure of my Company?

A further issue to be aware of is that closure is a permanent measure and you may believe it could either recover or be restarted in the future. In this case, you can inform Companies House that you wish to register the business as dormant – [3]GOV.UK “Dormant Companies –  and you will also need to inform HMRC. Although you no longer pay Corporation Tax, you do still need to file your Confirmation Statement and Annual Accounts.

The decision as to whether or not to close a company is often one of the biggest a director needs to make. In terms of expert advice, a licensed insolvency practitioner can be your best port of call – they have the knowledge and experience to guide on rescue mechanisms or to ensure an effective liquidation – if this is the most appropriate solution.


All Company Debt insolvency content is written by our licensed insolvency practitioners.

The primary sources for this article are listed below, including the relevant laws and Acts which provide their legal basis.

You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy here.

  1. GOV.UK “Liquidate your company
  2. LEGISLATION “The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies Act
  3. GOV.UK “Dormant Companies