CVL vs strike off: which is right?
The choice between a Creditors' Voluntary Liquidation and a strike off comes down to one question: does the company have debts it cannot pay? A strike off using form DS01 is cheap and simple, but it is only appropriate for a solvent or dormant company with no significant creditors, and crucially it does not write off any debts. A CVL is more expensive because it involves a Licensed Insolvency Practitioner, but it is the correct route for an insolvent company. Insolvency Service; gov.uk
- Strike off
- Cheap; solvent or dormant companies only; does not clear debts
- CVL
- For insolvent companies; deals with creditors; protects directors
- The deciding question
- Can the company pay its debts?
- Getting it wrong
- Striking off with debts can mean objection and investigation
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At a glance
| CVL | Strike off (DS01) | |
|---|---|---|
| Best for | Insolvent company that cannot pay its debts | Solvent or dormant company with no real debts |
| Who runs it | A Licensed Insolvency Practitioner (legally required) | The directors file form DS01 with Companies House |
| Typical cost | From around £4,000 to £7,000 plus VAT | A small Companies House filing fee |
| Deals with creditors? | Yes, in legal order of priority | No, it does not deal with debts |
| Effect on debts | Written off after assets are distributed | Not cleared; debts remain |
| Director protection | Protects directors who acted responsibly | With debts it can draw objections and investigation |
Let solvency decide
Run the insolvency tests and check the strike-off objection risk. If the company is insolvent, a CVL is the proper route; if it is genuinely solvent and debt-free, a strike off is fine. If in doubt, apply the tests first, because that answer decides which route you should take.
A CVL deals with creditors properly, handles employee claims, and protects directors who act responsibly. Trying to strike off a company that owes money usually fails, because HMRC and other creditors object, and it can expose directors to investigation and even disqualification, since dissolved companies can now be investigated. So the cheaper option is a false economy when there are real debts.
Where to go from here
- If you decide to speak to a Licensed Insolvency Practitioner, choose your own: our practitioner directory lists every practitioner on the official Insolvency Service register, and how to choose an insolvency practitioner explains what to ask. Always confirm their entry on the official register before you instruct anyone.
Common questions
Is it cheaper to strike off than liquidate?
Yes, but only solvent, debt-free companies should be struck off. With debts, a strike off usually fails, does not clear what is owed, and can expose you to investigation, making a CVL the correct route despite the cost.