With almost four decades of experience in business, Mike Smith is one of the founders of Company Debt and one of the UK’s most experienced mediators with HMRC.
Having previously owned several of his own successful companies and occupied senior roles as a director within both Legal and General and Sun Alliance during separate periods of his career, Mike founded Company Debt with a genuine desire to help stressed directors in challenging circumstances. He is also an expert in the alternative finance sector.
Creditors are calling, HMRC reminders are piling up and the company’s bank account is empty, or worse, frozen following a winding-up petition. It feels as though everything has ground to a halt, yet you are still legally responsible as a director.
The good news: UK law provides clear, lawful routes to close an insolvent company even when no assets remain. The risk: choosing the wrong route, particularly attempting strike-off while debts remain, can trigger restoration, investigation or director disqualification.
This guide explains what “no assets” really means, when strike-off is appropriate, and when formal liquidation is the safer option.
If the company is dissolved and assets later surface, they automatically pass to the Crown as bona vacantia under Companies Act 2006 s.1012.
Takeaway: assume assets may exist until properly reviewed.
Why Closure Still Matters When the Bank Is Empty
Even with £0 in the account, the company continues to exist in law until dissolved or liquidated.
During that time:
Statutory filing obligations continue
Corporation Tax remains in scope until dissolution or liquidation
VAT returns must still be filed (with penalty points and penalties applying for late submission)
Creditors may object to strike-off or petition for winding-up
If a creditor petitions under Insolvency Act 1986 s.122, and the court makes a winding-up order, control transfers immediately to the official receiver.
Letting a “dead” company drift increases risk. Acting early demonstrates responsible conduct.
Early Risks Directors Must Not Ignore
If the company cannot pay its debts as they fall due, you must act in creditors’ interests.
Key risks:
Wrongful trading (Insolvency Act 1986 s.214) – potential personal contribution order if losses increase after insolvency
Bounce Back Loan scrutiny – borrower remained fully liable; guarantee protects lender, not director
Winding-up petition consequences – post-petition transactions may be void without court validation
Bona vacantia – assets after dissolution vest in the Crown
Where insolvency is clear, continuing to trade without a viable rescue plan can create exposure.
Strike-off vs Liquidation at a Glance
Key Point
Strike-off (Dissolution)
Liquidation (CVL or Compulsory)
Legal basis
Companies Act 2006 s.1003
Insolvency Act 1986
Intended use
Non-trading company; liabilities settled or minimal
Insolvent company
Cost
£13 online / £18 paper
CVL: IP fees agreed with creditors; Compulsory: £2,600 deposit + court fee
Investigation
Possible investigation into dissolved companies
Conduct report mandatory
Creditor objection
Creditors may object before dissolution
Process continues once commenced
Finality
Company removed from register; can be restored
Company wound up and dissolved after process
Important: the law does not explicitly say a company must have “no debts” to apply for strike-off. However, creditors, including HMRC, may object and prevent dissolution if liabilities remain.
Strike-off is rarely appropriate for insolvent companies with unpaid debts.
When Strike-off Is Lawful, and When It Isn’t
A director may apply for voluntary strike-off if:
The company has not traded in the previous 3 months
It has not changed name in the previous 3 months
It has not disposed of property in the previous 3 months
It is not subject to insolvency proceedings
It sends notice of the application to all creditors, employees and relevant parties within 7 days (CA 2006 s.1006)
If debts remain, creditors may object and suspend dissolution.
Knowingly making a false statement in a strike-off application is a criminal offence.
Strike-off is suitable for dormant, debt-free shells, not insolvent trading companies.
Creditors’ Voluntary Liquidation (CVL) with No Assets
If the company is insolvent, a CVL under Insolvency Act 1986 s.84 is usually the appropriate route.
Process overview:
Shareholders pass a special resolution to wind up.
Directors prepare and deliver a statement of affairs within 7 days (Insolvency Act 1986 s.99).
The IP investigates conduct and realises any assets.
Even where assets are nil, the investigation requirement remains.
How fees are covered:
Recoveries from claims (preferences, undervalue transactions, director loan accounts)
Director contribution
Creditor funding in limited cases
If directors cannot fund a CVL and no creditor does, a creditor may petition for compulsory liquidation.
Compulsory Liquidation
A creditor owed at least £750 may petition for winding-up (threshold as set by statute).
Upfront petitioner costs:
£2,600 deposit
Court fee (varies by process, typically £280 or £343 depending on route)
After presentation and advertisement of the petition, banks commonly freeze accounts to avoid unlawful dispositions.
If the court makes a winding-up order:
The official receiver becomes liquidator
Directors lose control
Books and records must be delivered promptly
Failure to cooperate can result in court action.
Bounce Back Loans and Dissolution
Myth: “Strike-off wipes the Bounce Back Loan.”
Reality:
The borrower company remained fully liable
The government guarantee protects the lender, not the director
Lenders may seek restoration to pursue recovery
The Insolvency Service can investigate dissolved companies under the 2021 Act
Dissolution does not eliminate liability risk if misconduct occurred.
What Happens if Assets Appear After Closure?
After Dissolution (Strike-off)
Assets vest automatically in the Crown (CA 2006 s.1012)
Restoration is required to recover them
Administrative restoration is only available in limited cases (typically registrar strike-off)
Voluntary strike-off cases usually require court restoration
Most restoration applications must be made within 6 years, subject to limited exceptions.
During or After Liquidation
If liquidation has closed and new assets arise, the court may permit the case to be reopened.
Step-by-Step Director Checklist
Stop trading if insolvent.
Preserve all accounting records.
List all creditors.
Review for hidden or future assets.
Check for existing petitions.
Choose strike-off only if appropriate.
Notify all affected parties.
Avoid preferential payments.
Prepare statutory paperwork correctly.
Seek professional insolvency advice if unsure.
FAQs
1) Do I still need to file Corporation Tax returns?
Yes. A company remains within Corporation Tax until dissolved or liquidated. HMRC may object to strike-off if returns are outstanding.
2) Can I strike off if I owe HMRC?
You may apply, but HMRC frequently objects where liabilities or returns remain outstanding.
Strike-off is generally unsuitable for insolvent companies with unpaid tax.
3) What happens to a Bounce Back Loan?
The company remained fully liable. Lenders may seek restoration to recover the debt. Investigations can follow misconduct.
4) How long does a nil-asset CVL take?
Appointment may occur quickly, but closure commonly takes several months to complete statutory investigations and reporting.
5) Is the DS01 fee £13 or £18?
£13 online, £18 paper.
6) Will an official receiver investigate if there are no assets?
Yes. Conduct review is required regardless of asset level.
7) Can creditors restore my company later?
Generally, restoration must be sought within 6 years of dissolution (subject to limited exceptions such as certain personal injury claims).
Administrative restoration is only available in restricted circumstances. Voluntary strike-off cases usually require court restoration.
8) Do employees still receive redundancy?
Yes. Eligible claims are paid by the Redundancy Payments Service from the National Insurance Fund.
9) Does a CVL cost me personally if there are no assets?
If no assets exist, the IP will usually require director funding unless recoveries are expected.
10) What if money arrives after dissolution?
It becomes bona vacantia and vests in the Crown until restoration.
11) Can I be a director again?
Yes, unless disqualified (2–15 years for unfit conduct).
Restrictions also apply to reuse of company names following liquidation under Insolvency Act rules.
12) How long must I keep records?
Companies House guidance recommends retaining records for 7 years after dissolution. General accounting record requirements are at least 6 years.
Final Thought
A company with no assets can still expose its directors to risk if closed incorrectly.
Strike-off is appropriate only in limited circumstances. For insolvent companies with unpaid debts, a properly conducted liquidation is usually the safer route.
