The quick answer
Usually, a creditor like HM Revenue and Customs will petition to wind the company up and it will then be put into liquidation. There are still alternatives though – more on these below.
In more detail
There are three main choices to close down an insolvent company:
- You pay for liquidation, but this will be at least £3,000 plus VAT. You will need a Licensed Insolvency Practitioner like us to do this.
- You wait for someone to issue a winding up petition – you may have to wait three to six months for this. The most common creditor to wind a company up is HM Revenue and Customs.
- You use from DS01 available from Companies House. It is not actually a liquidation but a good cheap way to strike off a defunct company. It only costs £8 to do online. You have to be careful though and follow the rules on the form.
You might wonder why directors then pay for a company to be liquidated?
The reasons are:
- It is quick and takes about 10 days.
- It gets the creditors off your back as they have to deal with us.
- It is the best way to deal with any assets left.
- It helps employees make their redundancy claims quickly from the government.
- It stops the need to file accounts, VAT and PAYE information.
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If you have any questions, please do email or call me.