Your limited company has been sitting idle for months, yet Companies House still expects accounts and a confirmation statement. You could keep paying the annual filing fees, submit a £13 DS01 for strike-off, or move to formal liquidation, but which route keeps you inside the law and out of trouble?

Behind the paperwork sit late-filing penalties, criminal offences for improper strike-off applications, director conduct reporting in insolvency, and the risk that any forgotten assets pass to the Crown as bona vacantia. This guide explains when liquidating a dormant company is possible, sensible, and genuinely safe under UK law.

Quick answer: yes, but the route depends on solvency, assets and recent activity

Yes, you can liquidate a dormant company. The correct route depends on solvency, whether assets remain, and whether the company qualifies for voluntary strike-off.

• Liquidation is lawful even if the company is dormant.
• Use a Members’ Voluntary Liquidation (MVL) if the company can pay all debts in full and still has assets to distribute.
• Use a Creditors’ Voluntary Liquidation (CVL) or compulsory liquidation if the company is insolvent.
• If there are no debts and no assets, voluntary strike-off is usually cheaper and simpler.

Route	Official filing costs	Speed	Investigation risk
Strike-off	£13 online / £18 paper	Not less than 2 months after Gazette notice	Low (but objections possible)
MVL	IP fees (no fixed tariff)	Moderate	Low if declaration of solvency is accurate
CVL / Compulsory	IP fees; compulsory: £343 court fee + £2,600 petition deposit	Slowest	High (conduct report required)

Figures above are official statutory charges only. Professional fees vary.

What “dormant” really means

Dormancy has different meanings for Companies House and HMRC.

Companies Act definition

Under Companies Act 2006 s.1169, a company is dormant during any period in which it has no significant accounting transaction. The test is transactional, not asset-based.

Companies House

Companies House accepts dormant accounts if there have been no significant transactions in the financial year. Transactions that do not count include:

• Subscriber share capital on incorporation
• Fees paid to Companies House
• Penalties paid to Companies House

(As stated in official Companies House dormancy guidance.)

If other transactions occur, including bank interest, charges, payments, or receipts, the company may no longer qualify as dormant for Companies House purposes.

HMRC (Corporation Tax)

For Corporation Tax, a company is dormant when it has:

• Stopped trading
• No other income (e.g. rent, interest, royalties)

HMRC may confirm dormant status in writing. If the company earns income, including from property or intellectual property, it is normally not dormant for Corporation Tax.

Dormancy is about activity and transactions, not simply whether the company owns assets.

Why solvency, assets and eligibility matter more than dormancy

The label “dormant” does not decide how you close a company.

Three legal tests matter more:

1. Solvency – Can the company pay all debts in full?
2. Assets – Does it still own cash, property or intellectual property?
3. Strike-off eligibility – Does it meet Companies Act requirements?

Solvency

If the company can pay all debts in full (with interest) within 12 months, it is solvent and may use an MVL.

If it cannot, it is insolvent and must use a CVL or compulsory liquidation. Continuing to trade while insolvent can lead to wrongful trading claims under Insolvency Act 1986 s.214.

Assets

If a company is dissolved with assets still in its name, those assets automatically pass to the Crown as bona vacantia under Companies Act 2006 s.1012.

Strike-off without clearing assets can permanently destroy value.

Strike-off eligibility

Under Companies Act 2006 ss.1003–1005, a company cannot apply for strike-off if, in the previous 3 months, it has:

• Traded
• Changed its name
• Disposed of property or rights for value outside normal business activity
• Engaged in certain insolvency procedures

Applying when ineligible is an offence.

Your four options at a glance

Factor	Keep Dormant	Voluntary Strike-off	MVL	CVL / Compulsory
Cost	£50 online confirmation statement annually	£13 online DS01	IP fees (market-based)	IP fees; compulsory adds court fee + £2,600 deposit
Timeline	Ongoing	Registrar may dissolve not less than 2 months after Gazette notice	Usually several months	Often many months
Control	Directors	Directors	Liquidator	Liquidator / Official Receiver
Gazette	None (unless registrar strike-off)	Notice published	Insolvency notices published	Multiple notices published
Investigation	Minimal	Minimal (unless misconduct)	Limited	Director conduct report mandatory

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Keeping the company dormant – obligations and risks

Dormancy reduces accounting complexity, not legal responsibility.

Annual duties

• File dormant accounts
• File confirmation statement (£50 online / £110 paper)
• Maintain accounting records

Failure to file accounts results in automatic penalties between £150 and £1,500 for private companies. Persistent failure can result in prosecution and compulsory strike-off.

Voluntary strike-off – the low-cost route

Voluntary strike-off is available if the company:

• Has not traded or changed name in the last 3 months
• Is not subject to insolvency proceedings
• Has no outstanding arrangements with creditors

Steps

1. Clear liabilities
2. Distribute or transfer assets
3. File Form DS01 (£13 online / £18 paper)
4. Notify members, creditors, employees and others within 7 days (s.1006 CA 2006)
5. Wait, the registrar may strike off not less than 2 months after the Gazette notice

Objections (often from HMRC or creditors) suspend the process.

Members’ Voluntary Liquidation (MVL)

Used where the company is solvent and assets exceed liabilities.

Legal requirements

• Directors must swear a statutory declaration of solvency (Insolvency Act 1986 s.89)
• Debts must be payable in full (with interest) within 12 months
• Shareholders pass a special resolution (75%)
• A licensed insolvency practitioner acts as liquidator

The liquidator realises assets, pays creditors, distributes surplus to shareholders, and completes dissolution.

Creditors’ Voluntary or compulsory liquidation

If the company cannot pay its debts:

CVL

• Shareholders pass a winding-up resolution (75%)
• Creditors appoint a licensed insolvency practitioner
• Liquidator files a conduct report under Company Directors Disqualification Act 1986 s.7A

Compulsory liquidation

• Petition filed at court (£343 court fee + £2,600 deposit)
• The Official Receiver initially acts as liquidator and may later appoint an IP

In insolvent liquidations, director conduct is reviewed and may lead to disqualification or contribution claims.

Assets and bona vacantia

Under Companies Act 2006 s.1012, any property still vested in the company at dissolution passes to the Crown.

This includes:

• Bank balances
• Intellectual property
• Land and vehicles
• Refunds due

Once dissolved, the bank account is frozen and cannot be accessed by directors.

Restoration is possible but costly.

Pre-closure compliance checklist

Before closing:

• Confirm solvency position
• Clear or formally address debts
• File outstanding accounts
• File confirmation statement
• Transfer or distribute assets
• Use the correct statutory route
• Notify required parties
• Monitor Gazette notices

Common misconceptions

• Dormant means no assets – False. Dormancy concerns transactions, not ownership (s.1169 CA 2006).
• Liquidation always means insolvency – False. MVL applies to solvent companies.
• Strike-off removes liability – False. The company can be restored, and certain liabilities survive.
• Dormant companies do not need accounts – False. Annual filings are mandatory.
• Only IPs act in compulsory liquidation – False. The Official Receiver may act as liquidator.
• HMRC ignores dormant companies – False. You must notify HMRC when trading stops.

FAQs

One clear next step

Before filing anything, confirm:

• Is the company solvent?
• Are there assets remaining?
• Does it qualify for strike-off?

A short conversation with a licensed insolvency practitioner can confirm the safest route and prevent asset loss or personal liability.

This guide provides general information only and is not legal advice.