Cheapest Way To Liquidate a Company

Affordable Methods For A Cheap Liquidation

Liquidating a company can feel like a daunting and complex process – after all, it’s a regulated procedure that involves meeting legal and financial obligations. Whether you’re dealing with mounting debts or looking to close a business that’s no longer viable, handling the process properly is the only way to avoid complications later.

If you are searching for a cheap liquidation, it is crucial to balance cost with compliance to ensure that creditors and employees are treated fairly while you fulfill your legal duties as a director.

Creditors Voluntary Liquidation (CVL) Costs

The cheapest we can do a creditors voluntary liquidation (CVL) for a company is £4500 + VAT. This rate is typically for a company with only a couple of creditors, such as HMRC and some trade creditors.

While this cost may seem significant, a professional liquidation gives you a clean slate and protects you from future legal or financial problems. Taking shortcuts to find a “cheap” route that isn’t legal can lead to much greater costs in terms of stress, fines, or potential legal action.

If the cost of liquidation feels out of reach, don’t panic; there are other options available that could be more cost-effective depending on your situation. A licensed insolvency practitioner can run you through these options to ensure you make an informed decision.

How to legally liquidate a limited company on a budget?​

While professional fees are a reality, there are ways to reduce expenses and achieve a cheap liquidation in certain circumstances. Here are the most common methods:

Self Funding Though Asset Sales

If your company has assets, you can sell them to generate funds for the liquidation process. The proceeds will be used to pay creditors and cover the fees of the licensed insolvency practitioner, in order of priority; this allows the liquidation to be done cheaply.

Directors’ redundancy payments

Directors of insolvent companies may qualify for redundancy payments through HMRC’s Redundancy Payments Service, if you have been on the company payroll under PAYE. These payments can help cover the cost of liquidation, making it cheaper overall.

Allowing a creditor to force compulsory liquidation

One way to avoid direct costs is to allow a creditor to petition the court to forcibly liquidate your company. While this is technically the cheapest option for directors, it does come with serious downsides. It’s a lengthy process with additional legal complexities, and the court will appoint a liquidator who is independent and has no prior relationship with you.
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Risks of Compulsory Liquidation

The court-appointed liquidator is more likely to pursue you for debts you owe to the company (such as overdrawn director’s loan accounts) because they are not restricted by how much money is currently in the business. This is the only way you can liquidate a company with no money.

Dissolving the Company: If your company has no assets and owes no significant debts to creditors, you may be able to dissolve it by applying to strike it off the Companies Register. This is the simplest and cheapest route, but it’s only legally viable if your company does not owe substantial money to creditors or have outstanding legal actions.

Avoiding Scams: The Risks of “Cheap Liquidation” Specialists

The insolvency industry sometimes gets bad press because of unscrupulous advisors. If you are looking for a cheap liquidation or a way to dissolve a company, you must steer clear of unethical practices that could land you in legal trouble.

Paying someone to buy your company instead of closing it

Some operators may offer to buy your business as a supposed alternative to liquidating. This is not a legitimate process and is, in fact, unlawful. If you sell your company through these schemes, it will eventually face a court-ordered winding up process which can severely harm your reputation and future business prospects.  Here is a page about these scams

Court-ordered liquidation (Directors’ Petition)

In England and Wales, some advisors may suggest a court-driven liquidation process, sometimes called a directors’ petition. While some courts may accept this if directors are also creditors, others view it as an abuse of court processes. A legitimate cheap liquidation should always be handled by a licensed insolvency practitioner.

Misleading Promises regarding Dissolution

HMRC and other creditors typically reject dissolution applications if there are outstanding debts. If an advisor claims you can dissolve your company via Companies House while ignoring significant debts, they are providing flawed and potentially harmful advice.

Misusing directors’ redundancy to cover costs

Some advisors suggest redundancy pay will settle everything, but there are strict conditions:

• You must have a formal employment contract with the company.
• You must have been paid via PAYE (not solely through dividends).
• You cannot owe the company any money at the time of liquidation.
• The work you have done for the company must be more than minimum wage. Paying yourself a small threshold like £700 per month while working full-time is considered a “director’s drawing” as an office holder, not an employee, and usually won’t qualify.

Middlemen and “Insolvency Specialists”

Many people offer to liquidate your business very cheaply but are actually just taking a fee to refer you to an actual Licensed Insolvency Practitioner. You end up paying their fee plus the liquidator’s fee. Also, disbursements (third-party costs) can often exceed £1000 and are frequently hidden from the initial “cheap” quote.

How to Protect Yourself and Get Trusted Advice

• Always verify credentials: Make sure the firm you’re dealing with employs Licensed Insolvency Practitioners. Regulatory bodies include the IPA, ICAEW, ICAI, ICAS, The Law Society, and ACCA. Note that you can be a member of an accounting body and not actually be licensed as an IP.
• Assess their track record: Look them up on Companies House and check for genuine testimonials. Be wary of firms with no information about the actual people behind the business.
• Understand the legal protections: When dealing business-to-business, you are not covered by the Consumer Protection Act 1987. It is your responsibility to do thorough research (caveat emptor).

Get a Reliable Quote Today If you’re looking to liquidate your company affordably and safely, work with a firm that is upfront about costs. For free, confidential advice, call us at 0800 9700539 or visit our sister company Liquidate My Company for a transparent estimate within the hour.