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Liquidation For An Insolvent Company

Liquidation for a company that can’t pay its debts including HMRC tax debts

The What, Who, When, Why and How of Insolvent Company Liquidation
& How Much & Who Pays?


What Is Liquidation For An Insolvent Company?

  • Company Liquidation is a method used to close a UK Limited Company
  • An insolvent company liquidation is for a company that cannot pay those it owes money to
  • An Insolvent company is often referred to as having debts it can’t pay, include HMRC tax debt
  • Liquidation will bring the trading of a company to a close
  • The most common insolvent liquidation process is a Creditors’ Voluntary Liquidation (CVL) – click to read more

Important Learning:

 Only in exceptional circumstances is a company director personally liable for money owed by a company; this include tax debts due to HMRC

 Liquidation for an insolvent company is not always the only option for a limited company closure and we’d be keen to understand your company’s position to lay out the options for its position


Why Would A Company Liquidation Be Needed?

  • If the business that operates within a company is to no longer able to continue either at all or within that company
  • This could be because (for example):
    • The business has experienced difficulties that have led to being unable to pay those it owes money to
    • A creditor (someone owed money by a company) is taking or threatening legal action to recover money for a company
    • A key member of the company has not been able to work within the business for a period of time and the business has suffered losses because of that

Important Learning:

 It is possible, under advice, that a business that operates within an insolvent company could be transferred out to a new or different company that does not have the debts (money it owes) of the original company – this could allow a business that is burdened by historical difficulties to flourish without a debt burden. The key question then is, whether there is a business to be saved within the existing company.


When Would A Company Liquidation Be Needed?

For an Insolvent company (can’t pay its debts and owes more than it owes)

  • When a company director (directors) reaches the conclusion that a company cannot continue because of the level of money owed by a company and its inability to pay those that it should pay, for example:
  • Wages
  • HMRC tax
  • Landlord
  • Suppliers

Important Learning:

A company director has a duty to act in the best interest of the company; taking professional advice is a key step in satisfying that duty


Types of Liquidation For An Insolvent Company

  • Creditors’ Voluntary Liquidation – click to read more
    • The procedure of choice for company directors
    • An Insolvency Practitioner is appointed as the company liquidator
    • A meeting of creditors is either not required or is by phone
  • Compulsory Liquidation
    • A court based procedure
    • A winding-up petition is presented to court
    • A later court hearing will place the company into liquidation

Important Learning:

For an insolvent liquidation the liquidator must make a report to the government Insolvency Service on the conduct of the company directors. 


How is a Company Liquidated?

  • You may have noted the “Voluntary” word used in the Types of liquidation above
    • Voluntary means that the company directors and shareholders start the liquidation process at a time to suit them
    • The company directors hold a meeting to call a meeting or shareholders and creditors (we will prepare everything of these meetings)
  • A Compulsory Liquidation is started through the courts usually through enforcement action for unpaid debts
    • The directors are asked to attend court for the hearing to place the company into Compulsory Liquidation

Important Learning:

A insolvent compulsory liquidation is the route that HMRC will follow to pursue unpaid taxes from the company.  HMRC will issue a threat of company winding up and will then issue a winding up petition through the courts. This proceeds to a court hearing to place the company into compulsory liquidation.

HMRC will usually allow a company director to use a voluntary liquidation in place of a compulsory liquidation even after a winding up petition has been presented by them.


Who Can Act as a Company Liquidator?

  • Creditors’ Voluntary Liquidations can only have Licensed Insolvency Practitioners appointed
  • A Compulsory Liquidation will appoint the Official Receiver a Company Liquidator; though it’s possible that an Insolvency Practitioner may be appointed as the Compulsory Liquidator at a later point

Important Learning:

Though the role of a liquidator is restricted to those who are qualified and licensed, this restriction does not apply to those giving advice about insolvency, liquidation and rescue. Naturally we would recommend taking advice from someone that will act as the liquidator of your company and is therefore licensed



How Much Will a Company Liquidation Cost And How Is It Paid For?

  • We wouldn’t want to mislead you with eye catching headlines that turn out to be eye watering costs. We’d rather be upfront about costs; in fact you’ll be pleased with our prices and in the many cases we are able to work on a fixed fee basis
  • We will quote you on your actual situation and will be glad to offer you a price, that you can take or leave as you wish
  • A company will usually pay for its own liquidation from its assets (cash, money owed to it, physical assets etc.)
  • If a company does not have assets to use then typically company directors and shareholder pay to put a company into liquidation
  • An insolvent liquidation will start from £3,000
  • Click to learn more; Company Liquidation Costs

Important Learning:

Look out for unlicensed advisors who will add their costs on to the fees of any liquidator and push the overall cost upwards. In the situation that the directors and shareholders of the company are buying back the good bits of the company so that they can continue to trade then the costs of liquidation can usually be paid for from the money paid to buy the business back, so you’re not paying twice.


Any questions at all please get in touch; we’d be delighted to help?


A few useful bits of terminology for this page:

  • Limited Company: this refers to company registered at the UK Companies House; this includes Limited Liability Partnerships
  • Insolvency Practitioner: An individual Licensed in the UK to be appointed as a company liquidator
  • Official Receiver: An individual employed by the government’s Insolvency Service who can be appointed as Compulsory Company Liquidator in England and Wales (this is further explained later)
  • Business: A combination of skills and assets that work together with a goal of making profit

Important Learning:

Money owed by a limited company will not automatically be owed personally by the company directors or shareholders of that company



A Bit About Us?

As you would expect, we’re experienced, licensed and commercial company liquidation experts

We’re here to make your life as simple as possible; we’ll take over any difficulties immediately

Start your company liquidation today and protect your personal assets

We can come to you for a meeting

Company debts will be written off unless a guarantee or personal security has been given

What you might be surprised to learn is the number of directors that we are able to help to find an alternative solution for their company

You’ll be delighted to hear that our costs are only one of the reasons that many of our clients use our services

You may also understand that the correct advice at the outset will save money and protect your personal finances

Our Support Will Help

    • We would like to offer you a Free Options Review with one of our Licensed Insolvency Practitioners
    • Richard and the team, would be glad to explain your options to you; no jargon and no obligation
    • Simply call or leave your details and we’ll contact you
    • We do understand that this may be the first time that you’ve had to consider such a conversation
    • There’s no cost to speak to us and if you do need a formal process are costs will be a pleasant surprise
    • We are here to guide, inform and support you
    • Our advice will be geared to your company‘s own position
    • With our help you’ll be able to make an informed decision on the best solution
    • We’ve a team of 20 in total and have been established for 40 years

What Do We Need From You?

  • A little bit of your time please
  • Some background about your company
  • What would you like our immediate help with?
  • Is there a business within your company that you would like to save and continue with?

Don’t like nasty surprises?

Neither do we.

We’ll be honest and open with you which will mean no surprises for you as we undertake our legal requirements as liquidators.

We do ideally need to speak to you to advise you properly and often we will meet as well, if that is what you would prefer.


Why speak to us?

  • is owned and operated by F A Simms & Partners one of the most reputable and long established independent licensed insolvency practices.
  • We’re bricks and mortar and have a team of 20 ready to assist.
  • 2018 was our 40th year in business having advised and helped 1,000’s of businesses over that time.
  • Our administration centre is in Lutterworth in Leicestershire which means our costs are kept at a manageable level.  From this base we cover the UK.
  • Our directors are experienced, practical and commercial insolvency practitioners who also own our business.
  • We are not and don’t use brokers or consultants so there’s no need to pay twice to reach a licensed insolvency practitioner.
  • We’re actually very normal, approachable people who happen to work in the insolvency and rescue sector, we work hard and take pride in what we do!
  • Our reputation with our customers, partners and across the UK is the result of hard work and we will not damage that through poor advice.


If you are thinking about having to liquidate a company you will be faced with a mass of information from websites seeking to convince you to speak to them.

It’s not just the information that is freely available on the web that you will need to understand before deciding whether to liquidate and who to call on for help to liquidate.

It you do not fully understand both the process and the risks of liquidation you could be taking on a host of new problems that you weren’t aware of.

Whether your company cannot pay those that it owes money to or has assets or cash to distribute to its owners, we can help.

Why not get in touch and speak to one of our licensed insolvency practitioners who are also our company directors.  We can offer practical advice to help you make the best decision for your unique circumstances.

It’s free for a consultation and our advice is confidential.

Would you like to do some more research?

Options for your company – please click here to understand more.

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