When you need to liquidate your company in the UK, this comes at a cost. Generally speaking, you will be looking at around £2500 to £6000 + VAT in total; however, it can be more or less depending on what your current situation is like. The liquidation of a company cannot be done by anyone, it has to be carried out by a licensed insolvency practitioner (otherwise known as an IP), and this is why the price of liquidation can become quite expensive. Total Cost to Liquidate a Company in the United Kingdom is going to be explained in more detail below.
The Role of the Liquidator
Whenever you have any insolvency procedure going on, there has to be a creditor’s interest. So, what does the liquidator do? There are a lot of different and complex areas of legislation and this is why an IP is needed in order to help with liquidating your company, which comes at a reasonably high cost.
The IP that the company winds up appointing has a few different roles; the first thing that they need to do is assess all of the company’s assets and liabilities. All of the assets are going to be sold at a later stage at market value, the proceeds of which are used to pay off the fees of the IP and make distributions to unsecured creditors of the company in liquidation.
The number of people who work on a liquidation case tends to vary, but usually, there are around 3, sometimes more. Their roles will be to do checks on the organisation and ensure all of the correct paperwork is filed so that due diligence can be carried out. More people will be introduced to the case if there are more complex issues at stake.
Should Your Business Choose Liquidation?
If there are assets within your business that you need to distribute then yes, you should choose to go through liquidation. The whole process has been put together as a way to benefit the company that is going through its creditors, but you shouldn’t let this put you off. All of the insolvency procedures that you and your business could go through are geared this way, but that doesn’t necessarily mean that the liquidation won’t end up also benefiting you as the director.
If you are worried about the liquidator’s investigations (in other words, you are concerned about potential misconduct accusations), then you will benefit from entering into the process on your own accord. The reason for this is that it will be noted that you have been proactive and taken action yourself rather than waiting for a creditor to force you to take action.
The Costs of Company Liquidation
So, how much does it actually cost for you to liquidate a company? The final cost is largely dependent on the size of your company and how complex the situation is too. This is because there will be more work involved for the IP, and more people might need to look at your case, which means the cost will simply continue increasing.
If your company doesn’t have very much of a large asset value, then the whole process will likely cost anywhere between £2500 – £6000. Frustratingly, there isn’t a straightforward answer to how much the process will cost, so a ballpark figure is all that can be offered without knowing further information about your business, business size, asset value and situation.
What Will the Liquidator Do?
There are a few different duties that the liquidator will be responsible for, and these will all be overseen by the appointed IP. They will have to value and sell the assets and then also distribute what is made to the relevant creditors. They will also be responsible for carrying out an investigation into the conduct of the director to ensure that there hasn’t been any form of misconduct. There will be a particular focus on what has caused the company to become insolvent and how the company has found itself in this position.
The investigation is one of the major reasons why directors are instructed by insolvency experts to look into liquidation before things go even further downhill than they already have. If the process is left too late by the director, then it could be the case that they are found to be responsible for misfeasance, which will result in the loss of limited liability meaning they will become personally responsible for the debts of their company. It might even mean that they are disqualified from being a director in the future.
Directors Redundancy
Throughout the liquidation process, if you are a director, then it might be the case that you are entitled to directors’ redundancy. This payment can also be used as a means to pay for liquidation as well. There are a lot of directors out there who are not aware that they are able to claim redundancy pay, and again, this is another great reason why you should consider enlisting the help of experts.
In normal circumstances, directors are usually entitled to claim for about £12,000, but this is worth looking into. If you don’t have any other assets that you need to liquidate throughout the process, then this money could be used for other things as well. For instance, it can be used to cover the cost:
- If you are on the organisation’s payroll
- If you have been on that payroll for more than two years
- You have been working a minimum of 16 hours a week for the company
Do You Need Help with Liquidation?
Liquidation can cost a fair bit, but this is because of the fact it has to be done by an IP, and the process can be reasonably complex as well. If you need assistance with your company’s liquidation, then you should consider enlisting the help of specialists such as Simple Liquidation. We have specialists on hand who will be able to have a look at your organisation’s situation and help you through the liquidation process as quickly and cost-effectively as possible. If you have any questions then do not hesitate to get in touch and we would be happy to help.
