What is the Striking Off Process for a Limited Company?

The striking off process is a way for a limited company to be removed from the Companies House register.

This can be done if the company is no longer trading, or if it’s been wound up and all of its assets have been distributed. The process is started by the company’s directors, who must first file a notice of intention to strike the company off with Companies House.

Once this has been done, a notice will be published in the London Gazette, giving creditors and other interested parties 21 days to object to the striking off.

If there are no objections, the company will be removed from the register and dissolved. However, if there are objections, the process will be stopped and the company will remain on the register.

What does it mean to strike off a company?

When a company decides to strike off, it means that the company is no longer legally registered and is therefore dissolved. This usually happens when the company is no longer trading, or if it has been wound up by the court. Once a company is struck off, its assets are distributed among its shareholders.

However, striking off a company is not always as simple as it sounds. There are a number of requirements that must be met in order for a company to be struck off, and the process can be quite complicated. As such, it is always advisable to seek professional advice before taking any action.

The process of voluntary strike off can commence if:

• The business is solvent (this means the company must settle any outstanding debts within 12 months)
• There is no outstanding legal action against the business or it is not undergoing a creditor agreement such as a Company Voluntary Arrangement (CVA)
• It has not traded.
• It cannot have hanged it name in the last three months
• It has not sold any rights or property owned by the business in the last three months

The full conditions for voluntary strike off can be found in Sections 1004/1005 of the Companies Act 2006.

What happens if my company is struck off?

If your company is struck off, it will be removed from the Companies Register and will no longer exist as a legal entity. This means that it will no longer be able to carry out any business activities or enter into contracts. Striking off a company is a serious matter, and it should not be undertaken lightly.

If you are considering striking off your company, you should seek professional advice to ensure that you understand the implications. Once a company is struck off the register at Companies House, it no longer exists as a legal entity. This means that the company name is free for other businesses to use and the shareholders will not be able to engage in any business activities without risking serious legal repercussions, such as financial penalties, a directorship ban and personal liability for company debts.

If the company has any cash or assets that have not been distributed to the shareholders before it is struck off, their ownership will be transferred to the Crown through a process known as ‘Bona Vacantia’. To get those assets back, you may have to restore the company.

What should a company do before it is struck off?

Before you commence the strike off process there are a number of things you will need to do. The tasks will be dependent on the size and nature of your business and may including:

1. Complete all outstanding work and collecting any monies due
2. Make staff redundant and ensure that their final wage is paid along with any other monies due (holiday entitlement etc.)
3. Sell any company assets and distributing the proceeds among its shareholders
4. Prepare final accounts and the company tax return, then send it off to HMRC and Companies House. State clearly that these are the final accounts as the company will soon be dissolved
5. Pay HMRC any outstanding tax liabilities due (VAT, PAYE, NI or Corporation Tax)
6. requesting HMRC to close down the company’s payroll scheme
7. Deregistering for VAT
8. Paying outstanding company debts
9. Closing company bank accounts
10. Request final readings for utilities and other monthly services to an end

Why are companies struck off voluntarily?

Companies are struck off voluntary for a number of reasons, here are the reasons:

• The directors want to retire – and have no natural successor often choose to close their business by striking it off. While this may seem like a daunting task, it can actually be quite simple. The first step is to inform the company’s shareholders of the directors’ intentions. Once this has been done, the directors can then begin the process of closing down the business.
• A group of companies is being reorganised – Another common reason for a company to be struck off the register is when a group of companies is being reorganised. In this case, one business may have effectively become obsolete and its assets have been transferred elsewhere within the group. This can often happen when a business is acquired by another company or when two companies merge. Once the reorganisation is complete, the company that has been struck off will no longer exist and its name will be removed from the register.
• The business isn’t profitable – it can be used to close down a solvent business that is not as profitable as it was hoped and cannot be scaled effectively. The business has to have no debts and must not have traded for at least twelve months. If these criteria are met, then the business can submit an application to strike the company off the register at Companies House.
• The directors don’t agree – disagreements between directors and shareholders of a limited company happen more often than one would think. If they are disagreements that cannot be resolved, then striking off the company might be the best option. Although directors might not agree on everything, they should consult with each other before taking such a drastic measure. After all, a company is only as strong as its directors. If they can’t come to an agreement, then maybe it’s time to let the company go.
• It’s time to call it a day –It’s never easy to admit that it’s time to call it a day on a business. Even if the writing has been on the wall for a while, it can be tough to close the door on something you’ve poured so much time and effort into. However, sometimes it’s the best course of action, particularly if there are challenges on the horizon which make the future uncertain.

How much does it cost to strike off a company?

Discontinuing a company is a decision that should be made with great care and consideration, as it will have significant legal and financial implications. However, there are times when it may be the best course of action for a business. If a company is no longer trading and has no assets or liabilities, then it may be eligible to be struck off the Companies House register.

The process is relatively simple and inexpensive, costing just £8 when submitted online. Importantly, the fee must not be paid from the company’s account, as this would be considered proof of trading. Once the application is approved, the company will be officially dissolved and will no longer exist. While this may seem like a straightforward process, it’s important to seek professional advice before taking any action, as there can be unforeseen consequences of striking off a company.

When making the decision to strike off, it is important to be aware of all the associated costs. As the person in control of the process, you will be responsible for meeting all administrative requirements. This includes making staff redundant and paying any entitlements they are due, as well as settling debts owed to creditors and HMRC. In addition, you will need to factor in the cost of winding up the company, which can be significant. As a result, it is essential to create a realistic budget and have a clear understanding of all the costs involved before proceeding with striking off.

What is compulsory strike off?

Companies House is the UK’s registrar of companies and is responsible for striking off companies that are no longer trading. A compulsory strike off is typically initiated for non-compliance reasons, such as a failure to file the company’s annual accounts and/or confirmation statement. It can also be the case that a failure to notify Companies House of a change in the registered business address can lead to the initiation of the strike-off process.

However, Companies House must have reasonable grounds to believe the company has ceased trading before it can begin the process. Once the compulsory strike off process has been initiated, the company has 14 days to file any outstanding documents or notify Companies House of any objections. If no action is taken, the company will be struck off the register and dissolved.

If a company is struck off compulsorily it can have serious consequences for the directors. That includes:

• The company will cease to exist as a legal entity
• Any undistributed assets of the company will become the property of the crown
• The company’s ability to secure funding to rescue the situation will lapse
• Contracts with customers and suppliers will be placed at risk
• Directors could face a disqualification of up to 15 years
• Directors and shareholders being made personally liable for any future business’s debts if they continue to trade

Can you strike off a company with debts?

A company can only be struck off if it is solvent – this means that it must not have any outstanding debts. If the company does have debts, they must be repaid in full before the company can be struck off. If the company is currently undergoing an insolvency procedure such as a Company Voluntary Arrangement or has been threatened with legal action such as a winding up petition, it cannot be struck off.

This is because the purpose of striking off a company is to remove it from the Register of Companies, and if the company has debts or is facing legal action, this is not possible.If a company owes money to creditors and its application to strike off the Companies House Register is rejected, it will be viewed as insolvent.

In that case, a Creditors’ Voluntary Liquidation (CVL) is likely to be the best course of action. This is when the company’s directors reach an agreement with creditors to pay back what is owed over an agreed period of time. If the company cannot afford to repay its debts, the directors can appoint a licensed insolvency practitioner (IP) to manage the liquidation process.

The IP will then work with the directors to wind up the company’s affairs and distribute its assets to creditors. If you are facing insolvency, it is important to seek professional advice to ensure that you choose the right course of action for your business.

Can a struck off company be reinstated?

While it may be possible to have a struck off company reinstated, the process is often long and costly. In the case of a voluntary strike off, court action will be required to reinstate the company. That will involve a long-winded process that typically costs £500 to £800 plus additional costs and takes around four months.

As a result, companies that are struck off may find it more difficult to do business and may face significant financial penalties. here are a few reasons why directors or shareholders might choose to reinstate the company to the register so they can:

• Recommence trading within the company vehicle
• Realise a company asset
• Pay a claim made against the business (e.g. for a personal injury)
• Complete a lease or property transaction
• Realise pension funds

Being removed from the register can be a significant setback for a company, but it is not the end of the road. If the removal was done in error or without the company’s consent, it is possible to apply for administrative restoration. The process is completed by post and is reasonably simple. You must complete form RS01, make a payment of £100 and pay any other fees or payment penalties the company received.

Once the application is processed, the company will be restored to the register and can resume business as usual. In some cases, it may also be possible to appeal the decision to remove the company from the register. However, this process can be complex and time-consuming, so it is best to explore all options before pursuing this course of action.

Administrative restoration can be applied for if:

• You were a director or shareholder of the dissolved company
• The company was removed from the Companies House Register during the last six years
• The business was continuing to trade up until it was dissolved

Can I stop my company being struck off?

If you’ve received notice from Companies House that your company is due to be struck off, it’s important to act quickly. The compulsory strike off process is usually initiated in response to a failure to file accounts or an annual confirmation statement, and a notice will be published in the Gazette declaring that the company will be struck off in three months and removed from the Companies House Register.

During this time, interested parties, including shareholders and directors, creditors and employees can object to the application. So if you want to stop your company being struck off, you’ll need to act fast and make your case to HMRC or the court.

Your next move will depend on your plans for the company. If the business has ceased trading and is no longer active, you might be happy to let the process take its course. But if the business has outstanding debts, you should be aware that an objection to the strike off could come from a third party such as a supplier or HMRC.

If you wish to carry on training you will need to file a suspension application with Companies House. There could be a number of reasons why the compulsory strike off notice was issued, it maybe simply that your accounts have not been field or missing a confirmation statements. Once these compliance issues have been brought up-to date, the company will remain active and can continue to trade as normal.

Common third-party objections to strike off

If a company wants to be removed from the Companies House Register, it can apply to the Registrar to have its name struck off. In order for the company to be struck off, no third-party objections can be raised. However, third-party objections are common, and one of the most common objectors is an outstanding creditor such as a supplier or HMRC.

It is in the interests of company creditors to object to the application, as if the strike off is unopposed and the company is removed from the Companies House Register, the creditor would be unable to recover the debt. The fact that third-party objections are frequently raised shows that it is not always easy for a company to be removed from the register, even if it does not want to be there. This makes it important for companies to take into account all of the potential consequences of striking off before making a decision.

Common-third party objections include:

• Not informing all interested parties of the proposed strike off these include (members, employees, company creditors, managers or trustees of the company pension fund)
• The company has been trading wrongfully
• The company has not met the required conditions of the strike off application
• The declarations on form DS01 is believed to be false
• The directors have used the company to commit tax fraud or another offence
• Recovery action is underway for money owed. For example, through the small claims court or via a winding up petition

Once an objection to striking off has been made by an interested party, the Registrar will suspend the striking off for the next three-months.

What happens to share capital when a company is struck off?

The share capital is the money that is invested in a company by its shareholders. In the event of a company being struck off, it is important to realise and distribute this share capital amongst its creditors and shareholders. If this does not happen, the company will be dissolved and its stakeholders will be left with nothing.

This is why it is crucial to take action before a company is struck off, in order to ensure that everyone receives their fair share of the assets. Failure to do so can have serious consequences for all involved.

If a company has a share capital which is greater than £25,000, it will not be able to distribute this share capital on strike off. This is because the maximum value of share capital that can be distributed on strike off is £25,000.

Can a dissolved company be investigated? 

A dissolved company can be investigated but first it will need to be placed back on the the register. In this situation, creditors will be most most likely have the company restored via the court route.

Once the company has been restored to the company register, the creditors could appoint a liquidator to investigate the conduct of the directors. If the liquidator uncovers examples of fraudulent trading, wrongful trading or misfeasance, then the liquidator could bring court action against them.

The action could lead to the directors being made personally liable for company debts and/or a director disqualification of up to 15 years. If you’re a creditor with a claim against a dissolved company, it’s maybe worth investigating if there is a possibility to restore the company and hold the directors accountable for their actions.

What is the striking off form? 

The striking off form that is needed to apply for voluntary strike off is called a DS01 Form. The form is available from  Companies House, once completed it needs to be returned with a £10 cheque to the following address depending on where the business was based:

• English and Welsh companies – Companies House, Crown Way, Cardiff CF14 3UZ
• Scottish companies – Companies House 4th Floor Edinburgh Quay 2, 139 Fountainbridge, Edinburgh EH3 9FF
• Northern Irish companies – 2nd Floor The Linenhall, 32-38 Linenhall Street, Belfast BT2 8BG

Can I strike off my company online?

You apply to strike off your company online, you’ll need to submit the completed form and pay a reduced fee of £8. You’ll also have to enter the email addresses for the company directors so they can sign electronically to authorise the dissolution. All the directors or a majority of two must sign for the dissolution to go ahead.

It’s important to note that you can only dissolve a company online if it’s been inactive for at least 6 months. If you meet this criteria, you can apply online using the Companies House ‘strike off’ service. Just make sure you have all the relevant information handy, including company addresses and director names and email addresses. Once you’ve submitted your application, it usually takes 2-4 weeks for the process to be completed.

How to inform HMRC of company strike off 

In order to inform HMRC of your company’s intention to strike off, you will need to send a letter from the shareholders and directors (or, if they are one and the same, a single letter will be suffice). This letter should confirm the situation and state that you no longer wish for the company to continue trading.

You should also submit a final set of accounts and a company tax return, as well as paying the final balance of PAYE, Corporation Tax, National Insurance and any other outstanding tax liabilities. Finally, you should deregister from VAT and ask HMRC to close down the company’s payroll scheme. By following these steps, you can ensure a smooth and efficient process for striking off your company.

The letter needs to be sent to: 

Corporation Tax Services

HM Revenue and Customs

BX9 1AX

Can HMRC restore a dissolved company?

HMRC has the power to restore a dissolved company in order to recover a tax liability. This is not a decision that is taken lightly, as HMRC must weigh the costs of restoration against the potential benefits. However, HMRC will usually only restore a company if it believes or has proof that the company had a high level of assets before its dissolution.

If the company is restored, a liquidator will be appointed to recover any debts and you could be subject to legal action if any acts of fraud or misfeasance are suspected. It is therefore important to seek professional advice if you are facing HMRC enforcement action.

Can a struck off company be wound up?

If a company has been struck off the Companies House Register, it means that it is no longer a legal entity and cannot continue to trade. In order for the company to be wound up, action needs to be taken to restore it to the register. This can be done by either the company’s directors or by a creditor who has petitioned for the company to be wound up. If a winding up order is made against a struck-off company, then the usual notices and advertisement of the winding up order will not be issued.

Instead, the official receiver will contact the petitioning creditor to inform them that the company has been struck off and advise them to make an application to the court to restore the company if they want the winding up process to continue.

If the petitioning creditor is unwilling to restore the company, the official receiver will consider making an application to the court to do so if there are substantial realisable assets or it’s in the public interest to do so. If the petitioning creditor and the official receiver decide not to restore the company, an application to rescind the winding up order will be made. If the petitioning creditor or the official receiver decide to restore the company to the register, then the winding up proceedings will commence.

The liquidator/official receiver will complete their duties and the company director will face a full investigation into their conduct. In some cases, a struck-off company may be wound up even if there are no assets to distribute amongst creditors. The main reason for this is usually to ensure that there is a full investigation into director misconduct, as this can help protect other businesses from being damaged in future.

As such, although it may seem harsh, a struck-off company can sometimes be better off being wound up by the official receiver rather than simply disappearing altogether.

Most appropriate way to close your limited company?

Still not sure of the most appropriate way to close down your limited company? If your company has debts, the striking off process will not the the appropriate course of action. To talk though your options simply contact us on the number above or complete the online enquiry form.