If you want to close a UK limited company, you’re usually choosing between two routes: applying to strike off your company at Companies House (voluntary dissolution), or entering a liquidation.
Strike off is designed for companies that have stopped trading and have no debts. Liquidation is the formal, creditor-facing process for insolvent companies, or a tax-efficient close down for solvent ones. Picking the right option protects you from risk and helps you move on cleanly.
What is strike off?
Strike off (also called dissolution) removes a company from the register at Companies House. You can only use it if the company has not traded or sold stock in the last three months, has not changed its name in the last three months, is not threatened with Compulsory Liquidation or a winding-up petition, and has no agreements with creditors, like a Company Voluntary Arrangement.
How it works
You apply using a DS01 form. A majority of directors must sign, you must notify interested parties within seven days, and you should close bank accounts and deal with assets first.
Companies House then places a notice in the Gazette. If no one objects in standard notice period, the company is struck off. Creditors and other parties can object during the notice period.
Critical limitations
Outstanding debts: If you owe money, creditors can and often do object and block a strike off, including HMRC and lenders, especially if you have a Bounce Back Loan outstanding.
Forgotten assets: Anything left in the company when it’s dissolved becomes bona vacantia (belongs to the Crown), including bank balances or later tax refunds.
Director scrutiny: Dissolution does not shield misconduct. The Insolvency Service has the power to restore a company to the Companies House register, to investigate directors of dissolved companies. They can then seek director’s disqualification if there’s evidence of wrongdoing.
What is liquidation?
Liquidation is a formal process led by a licensed insolvency practitioner who collects and realises assets to repay creditors’ claims where possible, investigates the causes of insolvency and ultimately closes the company.
Creditors’ Voluntary Liquidation (CVL): For insolvent companies that cannot pay debts on time or in full. Directors initiate CVL close the business in an orderly way and deal properly with all creditors.
Members’ Voluntary Liquidation (MVL): For solvent, cash-rich companies with over £25k in retained profits. It’s used to distribute retained profits tax-efficiently and wind up the company cleanly.
Compulsory Liquidation: Court-led closure after a creditor’s petition. If you’re already facing a winding-up petition, a strike off is not an option available to you.
Liquidation vs strike off at a glance
Eligibility
- Strike off: No trading for 3 months, no name change, no ongoing insolvency threat, no creditor arrangements. Debts make objections likely.
- Liquidation: Available whether solvent (MVL) or insolvent (CVL). Correct route where there are debts.
Creditor treatment
- Strike off: Informal. Creditors can object during the Gazette window and can restore the company to pursue claims later.
- Liquidation: Formal claims process. All creditors are notified and dealt with by the liquidator.
Director risk
- Strike off: Misuse can lead to objections, restoration or investigation of dissolved companies and potential director’s disqualification.
- Liquidation: Conduct is reviewed but choosing a CVL early could reduce the risk of wrongful trading because losses to creditors are limited and affairs are handled properly.
Cost and speed
- Strike off: Low fee plus the Gazette timeline if there are no objections. Risk of delay if creditors object.
- Liquidation: Higher professional costs but these comes with certainty on creditor issues and protects you from a failed strike off.
Assets
- Strike off: Anything left when dissolved passes to the Crown. You must empty the bank and transfer any assets before applying.
- Liquidation: Assets are realised by the liquidator to repay creditors (in the case of a CVL) or distributed to shareholders (in the case of an MVL).
Common scenarios and what to do
You’ve stopped trading and owe nothing
If the company is truly debt-free and dormant, strike off is usually a safe option. If you expect a VAT reclaim, insurance rebate or other refund, wait for it before applying or you could lose it to bona vacantia.
You have trade or tax debts, or a Bounce Back Loan
Strike off is likely to be blocked by creditor objections. A CVL can still close the business properly, notify all creditors and draw a line under unsecured debts. HMRC and lenders routinely object where payments are outstanding.
You tried to strike off but got an objection
Don’t re-file the DS01 repeatedly. Speak to a licensed insolvency practitioner. If the company cannot pay what it owes, moving to a CVL could resolve the issues and reduce risk to you personally versus letting matters drift.
Key takeaways for Liquidation vs Strike off
- Strike off doesn’t suit everyone: It’s only an option for dormant, debt-free companies that meet Companies House rules and have no creditor agreements.
- Liquidation gives you certainty: A liquidation gives you the peace of mind that every loose end is taken care of, so you can walk away with no worries—whether your company is solvent or insolvent.
- Creditors can block a strike off: HMRC and lenders can and do object where money is owed, which delays or stops dissolution.
- Assets must be dealt with in a strike off: Anything left at dissolution passes to the Crown as bona vacantia.
Talk to our licensed experts
If you’re weighing up liquidation vs strike off, a free, 10-minute conversation with our insolvency experts will give you the facts and can save weeks of deliberation. We’ll look at your debts, HMRC position and other liabilities, then give you a clear, practical answer on the safest way to close.
