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How much does it cost to dissolve a company?

Posted on: Tuesday 22nd December, 2020

How much does it cost to dissolve a company?

Dissolving a company means your business closes down, and is removed from the register at Companies House. You can dissolve your company yourself, and this is an inexpensive option, but there are broader issues that you also need to consider before taking this route.

So what is dissolution in more detail, and how much does it cost to dissolve a company?

What does dissolution mean?

Company dissolution is a process that you can carry out with no professional support, but a key eligibility requirement is that your company is solvent. This means there are sufficient funds to repay all business debts, plus interest, within a 12-month period.

It isn’t a process for businesses that have entered insolvency, and your creditors may challenge an application if you try to go ahead. Part of the procedure involves notifying all creditors of your intention to dissolve the company, and an advert is also placed in the Gazette.

Creditors can make a claim to recover their debts even after the company has been removed from the register. In fact, this is one of the dangers of voluntary dissolution – the potential for your company to be restored at a later date.

How much does company dissolution cost?

It costs £10 to voluntarily dissolve a company - you can make an application online or by post to Companies House. This is an inexpensive option when you want to close down a company that’s solvent – perhaps if you’re retiring, or want to move on to other ventures – but there are specific benefits in entering voluntary liquidation.

If you suspect that your company may be insolvent, however, it’s crucial to seek a professional opinion on this. A licensed IP will be able to advise on your legal obligations as a director in this situation, and provide reliable unbiased guidance on your best options.

 
Redundancy claims are a very professional company, Caroline who is dealing with our case is friendly, compassionate and very clear in explaining everything during this difficult time. The service we have received has been amazing, Thank you.
 
 
Tina Hill
 
Tina Hill

Voluntary liquidation as an alternative to dissolution

Creditors’ Voluntary Liquidation (CVL) is a formal procedure for insolvent companies, and places the interests of creditors first. It must be administered by a licensed insolvency practitioner (IP), and although it’s significantly more expensive than dissolution, you may be able to claim director redundancy to cover the cost.

If your company is insolvent and you don’t prioritise creditor interests, you could face allegations of misconduct or wrongful trading. Personal liability might then become an issue, in addition to potential disqualification for up to 15 years.

The average director redundancy claim currently stands at £9,000, so it’s worthwhile considering voluntary liquidation over company dissolution, not only for this reason but also to protect yourself and other directors from the serious ramifications of making the wrong choice.

To find out more about dissolving or liquidating your company, and also whether you’re eligible for director redundancy, please contact our experts at Redundancy Claims UK. We can arrange a free consultation in complete confidence, help you understand your options, and then take the most suitable path.


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