The short answer
Liquidation is a formal winding-up run by a licensed insolvency practitioner: assets are realised, creditors paid in legal order, conduct investigated, and the company dissolved. Dissolution by strike-off (Companies House form DS01) is a simple administrative closure for a company that is dormant or solvent with no debts. Using strike-off to escape debts is not appropriate — creditors can object, restore the company, or force a winding up.
“Can’t I just strike the company off?” is one of the most common questions directors ask — and one of the riskiest to get wrong. Strike-off is a quick, cheap way to close a company that has finished cleanly with nothing owing. Liquidation is the proper route when a company owes money it cannot pay. This guide explains the difference and why the choice matters.
Liquidation vs dissolution at a glance
- Liquidation Formal winding-up by a licensed IP
- Dissolution Strike-off via Companies House DS01
- Right for liquidation Company that owes money it cannot pay
- Right for strike-off Dormant or solvent, no debts
- Cost Liquidation: IP fee · Strike-off: small fee
- Risk of misuse Strike-off with debts: objection & restoration
What liquidation does
Liquidation is a formal insolvency procedure. A licensed insolvency practitioner is appointed to take control, sell the company’s assets, agree creditor claims, distribute funds in the statutory order of priority, investigate directors’ conduct, and then have the company dissolved. It is the correct route for an insolvent company — see creditors’ voluntary liquidation — and it deals properly with debts.
What dissolution (strike-off) does
Dissolution by strike-off removes the company from the Companies House register using form DS01. It is an administrative process, not an insolvency procedure: there is no practitioner, no investigation, and no distribution. It suits a company that has stopped trading, settled everything it owes, and has no creditors or assets of concern. Solvent companies with reserves usually choose a members’ voluntary liquidation instead, for the tax treatment.
Side-by-side comparison
| Feature | Liquidation | Dissolution (strike-off) |
|---|---|---|
| Nature | Formal insolvency procedure | Administrative closure |
| Run by | Licensed insolvency practitioner | The directors, via Companies House |
| Suitable when | Company owes money it cannot pay | Dormant or solvent, no debts |
| Creditors | Paid in order of priority | Must be none outstanding |
| Conduct investigation | Yes | No |
| Cost | IP fee (assets or contribution) | Small Companies House fee |
Why strike-off is wrong with debts
- A director must tell creditors and notify them of a strike-off application — concealing debts is improper.
- Creditors can object, halting the strike-off.
- A struck-off company can be restored for up to several years so claims can be pursued.
- Improper use of strike-off can result in director disqualification.
Choosing correctly
If the company is genuinely debt-free and dormant, strike-off is fine. If it owes money it cannot pay, liquidation is the proper, protective route. If you are unsure which describes your company, take advice before filing anything — only a licensed insolvency practitioner can place a company into liquidation.
Not sure if you can strike off or must liquidate?
A licensed insolvency practitioner can tell you in minutes whether strike-off is safe or whether liquidation is required. A short, confidential call avoids a costly mistake.
Frequently asked questions
Can I strike off a company that owes HMRC?
No — that is not appropriate. HMRC can object to the strike-off, restore the company, and pursue the debt, potentially through a compulsory winding up.
Is strike-off cheaper than liquidation?
The filing fee is small, but using it improperly with debts outstanding usually ends up more expensive after objections, restoration or a winding-up petition.
What is the difference for a solvent company?
A solvent company with significant reserves usually prefers a members’ voluntary liquidation for its tax treatment, rather than a simple strike-off.
Can a struck-off company be brought back?
Yes — creditors or others can apply to restore it to the register so claims can be pursued, often for several years afterwards.
Sources & further reading
- GOV.UK — Strike off your limited company (DS01)
- GOV.UK — Liquidate your limited company
- Insolvency Act 1986 — winding up and dissolution
- The Insolvency Service — guidance for company directors
This guide is general information, not formal insolvency advice. Your situation must be assessed by a licensed insolvency practitioner before you act.