LiquidationHelp FAQs

Is your business insolvent? If it can’t pay all its debts in a reasonable timeframe - usually a year - then it technically is and should be closed.

If your company finds itself in this situation then you could choose a CVL to close your business or wait for a court or creditors to force the issue. This is known as a compulsory liquidation.

A CVL is always better because it gives the directors more control over the process including choosing the liquidator. In a compulsory liquidation, the official receiver oversees the process with little or no input from directors, limiting their influence.

All outstanding debts, apart from personal guarantees, are written off and any ongoing legal action against the company ceases.

Any staff that are owed wages, holiday pay, notice pay or redundancy can claim from the National Insurance Fund via the liquidation - as can directors who receive all or part of their earnings through PAYE.

An independent valuer will assess the worth of any physical assets the business owns while the liquidator will do their best to sell them for the best possible price.

This could include direct sales to new management, an auction or through online sales.

Any funds raised from sales goes toward paying off creditors.

A Creditors Voluntary Liquidation (CVL) is when the directors of a company start the legal process of closing it because it’s insolvent - unable to pay its debts.

It’s the most common business insolvency process and in most cases is the quickest, least expensive and most efficient way to close an insolvent business.

Liquidation is a statutory legal process so has to be carried out by a licensed Insolvency Practitioner for it to be accepted.

Only company directors can initiate a CVL, which usually takes from between 10 working days and four weeks to complete from beginning to the company being formally liquidated.

See our liquidation animation here.

The appointed liquidator needs certain company information and legal documents to proceed including bank statements, accounts and a full Statement of Affairs.

They will place a liquidation notice in The Gazette newspaper and convene two liquidation meetings - one for shareholders (or members) and one for creditors.

The first meeting sees the company formally put into liquidation while the second meeting allows creditors to learn more about the proposals and get answers to any questions they may have. They will then have the opportunity to vote on the resolution.

Liquidation is a matter of public record which can be searched for but the company is a separate legal entity from its directors so there will be no mention of the liquidation on any personal credit searches or files.

A Members Voluntary Liquidation is an easy and tax efficient way to close a solvent business.

If done correctly, it will help directors maximise the tax advantages of closing the company and disposing of surplus cash and assets while complying with the Targeted Anti Avoidance Rule (TAAR) legislation which clamps down on tax avoidance.

In order to be truly cost effective, a business should have assets of £20,000 or over before liquidation.

When directors of a solvent company want to close it down in the most efficient way they will choose an MVL.

As well as being able to be completed in as short a period as ten working days, it also allows directors to release any surplus cash and assets and claim Business Asset Disposal Relief (BADR, formerly known as Entrepreneurs’ relief) on them.

This means they will pay less tax on their final profits than other methods of disposal.

An MVL has to be legally carried out by a licensed insolvency practitioner but it's a relatively inexpensive and quick way to close a solvent business.

Once you appoint a licensed insolvency practitioner, they will chair a virtual meeting with the board of directors to explain all the full process and implications of an MVL.

Directors will then begin to complete the necessary tasks to complete the process including raising final invoices, paying any immediate outstanding debts and preparing final accounts and tax returns.

Once a liquidator is appointed, directors have to make a legal declaration of solvency that formally sets out the company’s assets, liabilities and confirms that the company can pay off all its debts within 12 months. Remember - making a false declaration of solvency is a criminal offence.

A final virtual meeting with directors and shareholders is held to confirm the MVL then the liquidator proceeds in selling any remaining assets before distributing the proceeds to creditors then members - in that order.

Once this is done, HMRC will give their final approval to dissolve the company.

Business Asset Disposal Relief is the successor scheme to Entrepreneurs Relief.

It means that directors or shareholders can pay the BADR rate of 10% on all final profit distributions rather than the higher Capital Gains Tax.

It can lead to significant savings and is one of the reasons why an MVL is considered a tax efficient way of closing a business but professional advice should always be taken in order to avoid falling foul of TAAR - the HMRC’s Targeted Anti Avoidance Rule.

An MVL and a CVL are both voluntary procedures to close a business down but with one key important difference.

The MVL process is used exclusively by solvent companies - those that can pay their debts in full within a 12 month period.

A CVL is used to close any insolvent company that cannot pay its debts.

There are other differences such as the proceeds of assets sold. In a CVL they go entirely to creditors, while in an MVL once all creditors have been paid, proceeds are returned to shareholders.

Dissolving, or striking off a company, is another way of closing it down.

It’s informal, can be done relatively easily and cheaply but a business has to meet a strict set of criteria to qualify otherwise it should look at liquidation.

Under the new Rating and Director Disqualification Bill, and director that allows a company to be struck off or dissolved whilst it has debts (including HMRC or a bounce back loan, is likely to be disqualified from acting as a director and fines.

Most simply - if your business has debts then it cannot legally dissolve and should liquidate instead.

LiquidationHelp.co.uk is a new intelligent online insolvency solution for busy business owners and directors.

We’re part of the bigger BusinessRescueExpert.co.uk family that has been providing excellent insolvency advice and solutions to UK businesses for over 16 years so we can access additional expert support as and when we need it to provide you with the smoothest experience from initial inquiry to final outcome.

The final quotation we provide will be the fee you pay.

Use the Online Quoting Assessment to get an initial quote.

No hidden extras, no last minute additional fees, no small print surprises and no special offers designed to get you to pay more or quickly.

That’s it. If you’d like to pay us more, that’s fine but it doesn’t happen very often

The final quotation we provide will be the fee you pay.

Use the Online Quoting Assessment to get an initial quote.

No hidden extras, no last minute additional fees, no small print surprises and no special offers designed to get you to pay more or quickly.

That’s it. If you’d like to pay us more, that’s fine but it doesn’t happen very often.

Between 2 to 4 weeks depending on the information required.

If this changes during the course of your case then we will let you know as soon as possible.

We have a statutory duty to investigate the actions of any directors of a business which enters liquidation.

The vast majority act in the company’s best interests and have nothing to worry about from this legally required step.

If we do find anything questionable, you’ll have the opportunity to explain and provide evidence to back the decisions taken before our final report is submitted.