Discover the costs involved in liquidating a limited company, including professional fees and legal expenses.

What’s the Cost of Liquidating a Company?

Creditors’ Voluntary Liquidation Cost

The cost to liquidate a limited company in the UK is typically £4,000 to £ 6,000 or more for an insolvency practitioner’s fees, plus additional legal, disbursement, and court fees. Company liquidations must be carried out by a licensed insolvency practitioner (IP) whose costs will vary firm by firm.[1]Trusted Source – R3 – Insolvency Fees.

Larger Company CVL Cost

Larger companies with more assets or complex winding-up needs may incur total liquidation costs above £10,000-£15,000 or more in some cases.

Members Liquidation Cost

The cost of a Members’ Voluntary Liquidation (MVL) – which is used to close solvent companies with assets over £25k – is typically lower than that of a CVL, but again, this will vary depending on the amount of work required.

Cost TypeEstimated RangeDescription
Insolvency Practitioner Fees£4,000 – £6,000+Fee for the licensed professional handling the liquidation process. They manage the company’s assets, pay creditors, and ultimately dissolve the company.
Solicitor’s Fees (Optional)£1,000 – £3,000Legal guidance and filing paperwork (may not be required for small companies).
Disbursement Costs£500 – £2,000Third-party expenses like advertising the liquidation or asset valuation.
Court Fee (if applicable)£280Fee for filing a winding-up petition with the court.
VAT (on most fees)20%Value Added Tax applied to most liquidation costs.

What Additional Costs are Incurred in Liquidation?

In addition to the liquidator’s fees, you might face the following additional costs:

  • £1,000 to £3,000 for solicitor’s fees: Legal guidance and filing necessary paperwork (not always required for small companies)
  • £500 to £2,000 for disbursement costs: Third-party costs such as advertising the liquidation or valuing assets
  • £280 court fee: For a winding-up petition if the liquidation process involves a court
  • 20% VAT: Applicable on most of these fees
How-Much-Does-it-Cost-to-Liquidate-a-Limited-Company_

Who is Responsible for Paying?

In a voluntary insolvent liquidation, the costs of liquidation are typically covered by the sale of the company’s assets. Should these assets be inadequate, the directors or shareholders of the company might be required to pay the remaining liquidation costs out of their own pockets.

In compulsory liquidation cases, the party initiating the process (by petitioning for the winding up of the indebted company) bears the burden of paying the liquidation fees[2]Trusted Source – GOV.UK – Wind up a company that owes you money.

In a Members’ Voluntary Liquidation (MVL), the liquidation costs are taken from the sale of company assets. Once these costs are paid, the remaining funds are distributed to the shareholders.

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What if my Company Cannot Afford the Costs of the Liquidation?

If your company cannot afford liquidation costs, options include negotiating a payment plan with the liquidator, using company assets, borrowing funds, or using personal funds.

There are a few different ways that liquidation fees can be paid:

  • Immediately: The company may have enough cash on hand to pay the liquidation fees immediately.
  • Over time: The liquidator may agree to spread out the payments over time.
  • Contingency: The liquidator may agree to defer payment of their fees until the company’s assets have been sold and the proceeds distributed to creditors.
  • Partial upfront payment: The company may make a partial upfront payment to the liquidator, with the remaining balance due once the company’s assets have been sold.

However, be aware that if the company’s assets are insufficient, directors may risk personal liability for its debts. If these options fail, the liquidator might seek a compulsory winding-up by the court.

Can Directors be Personally Liable for Liquidation Costs?

Directors are not typically personally liable for liquidation costs. These costs are usually covered by the company’s assets. However, if there are no company assets or cash available, directors may need to pay from their personal funds.

Additionally, directors can be personally liable if they have given personal guarantees for company debts or if found guilty of wrongful or fraudulent trading, potentially making them responsible for the company’s debts, including liquidation costs.

Thinking of Liquidating Your Company?

At Company Debt, our licensed insolvency practitioners provide transparent, competitive fees and tailored solutions to help you navigate the liquidation process with clarity and confidence.

If you need help understanding the best way forward for your company, use the live chat during working hours, or call us on 0800 074 6757. We’ve helped 1000’s of directors navigate difficult financial circumstances.

FAQs on Liquidation Costs

Any company assets like property, equipment, vehicles, stock, debtors and intellectual property may be sold by the liquidator to cover costs.

Yes, you can negotiate the fees with your insolvency practitioner. However, lower fees may limit the amount of personalized service and advice you receive.

Yes, VAT is usually applicable to liquidation fees and is an additional cost to consider.

While cost is an important factor, also consider the practitioner’s experience and reputation. A less expensive practitioner might not offer the quality of service your situation requires.

References

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 our standards for producing accurate, unbiased content in our editorial policy here.

  1. Trusted Source – R3 – Insolvency Fees
  2. Trusted Source – GOV.UK – Wind up a company that owes you money