Declaration of Solvency (Form LIQ01): a plain-English guide

A Declaration of Solvency is the sworn statement company directors make to confirm a company can pay its debts in full before it is wound up voluntarily. Here is what it involves and how it is witnessed.

What is a Declaration of Solvency?

A Declaration of Solvency is a statutory declaration made by the directors of a solvent company under section 89 of the Insolvency Act 1986. In it, the directors state that they have made a full inquiry into the company's affairs and have concluded that the company will be able to pay its debts in full, together with interest at the official rate, within a stated period of no more than 12 months from the start of the winding up.

It is the document that allows a solvent company to be closed through a Members' Voluntary Liquidation (MVL). Notice of the declaration is given to Companies House on Form LIQ01.

Who has to sign it?

The declaration is made by the director, or, where a company has more than two directors, by a majority of them. Because it is a statutory declaration, each director making it must swear it in front of a solicitor or commissioner for oaths.

What the declaration must contain

A statement that the directors have made a full inquiry into the company's affairs.
Their opinion that the company can pay its debts in full, with interest at the official rate, within a period not exceeding 12 months.
A statement of the company's assets and liabilities as at the latest practicable date.

The key deadlines

Timing matters. The declaration must be made within the five weeks immediately before the date the winding-up resolution is passed (or on that date, but before the resolution). A copy must then be delivered to the Registrar of Companies at Companies House within 15 days of the resolution being passed.

Missing these deadlines can derail the process and may expose the company and its officers to fines, so most directors arrange the witnessing appointment before the shareholders' meeting.

Why it has to be witnessed

A Declaration of Solvency is a statutory declaration under the Statutory Declarations Act 1835. That means it is not simply signed: it must be sworn or affirmed in front of an authorised person, normally a solicitor or commissioner for oaths, who confirms the identity of the person making it and administers the declaration.

Making a false declaration

Directors should not treat this as a formality. A director who makes a Declaration of Solvency without having reasonable grounds for the opinion that the company can pay its debts in full within the stated period commits an offence and can face a fine or imprisonment. Take the inquiry into the company's finances seriously and keep a record of it.

How FastDec helps

FastDec arranges a short video appointment with a UK solicitor who witnesses your signature and administers the declaration remotely, for a fixed fee of £125. Same-day appointments are normally available, and the completed document is returned to you by email to keep or pass to your liquidator.

Frequently asked questions

Is a Declaration of Solvency the same as Form LIQ01?

They are closely linked. The Declaration of Solvency is the sworn statement the directors make. Form LIQ01 is the Companies House form used to give notice of that declaration, which you file at Companies House along with the signed declaration.

Can a Declaration of Solvency be witnessed online?

It is a statutory declaration, so it must be sworn in front of an authorised person such as a solicitor. Companies House has accepted declarations of solvency made by video conference, and FastDec arranges exactly this type of remote appointment. You should confirm that a remotely witnessed declaration is acceptable for your particular case.

How many directors need to sign?

The director signs it, or, where there are more than two directors, a majority of them. Each director who makes the declaration must swear it before a solicitor or commissioner for oaths.

How quickly can it be done?

FastDec normally offers same-day video appointments at no extra cost, so the declaration can usually be witnessed and returned to you the same day.

What does it cost?

FastDec charges a single fixed fee of £125 to arrange the remote witnessing appointment, whether you book in advance or for the same day.

Online Statutory Declarations