Company Strike Off

Company strike off is the formal process of removing a limited company from the Companies House register.

Once the process is complete, the company is dissolved and legally ceases to exist. It can no longer trade, own assets, enter into contracts or bring legal proceedings unless it is restored to the register through the courts or administrative restoration where applicable.

Many directors choose voluntary strike off when:

• The business has fulfilled its purpose.
• The company has never traded.
• Trading has ceased permanently.
• The directors are retiring.
• The company has become dormant.
• A solvent company is no longer required.

For businesses that meet the eligibility criteria, strike off is usually the quickest and most cost-effective way to close a company.

However, directors should understand that strike off is not designed to avoid company debts. If creditors believe they are likely to lose money because of the application, they can object and prevent the company from being dissolved.

Compulsory strike off is started by Companies House rather than the directors.

It usually happens because the company has failed to meet its legal obligations, such as:

• Failing to file annual accounts.
• Failing to submit a confirmation statement.
• Not responding to official correspondence.
• Appearing to no longer be carrying on business.

Companies House will publish a First Gazette Notice for Compulsory Strike Off, giving interested parties the opportunity to object before the company is removed from the register.

A compulsory strike off should never be viewed as an alternative to dealing with company debts. Creditors, including HMRC, frequently object to compulsory strike off applications where money remains outstanding.

A company cannot normally apply for voluntary strike off if, during the previous three months, it has:

• Traded or carried on business.
• Changed its registered name.
• Sold property or rights it previously held for sale in the normal course of business.
• Taken part in activities other than those needed to close the company, complete its affairs or meet legal requirements.

The company must also not be subject to formal insolvency proceedings or an existing arrangement with creditors.

Some limited activity is allowed where it is necessary to bring the company’s affairs to an end. For example, directors may settle bills, collect money owed to the business, dispose of assets and complete closure paperwork.

Before applying, directors should normally:

• Stop trading.
• Deal with outstanding creditors.
• Submit any required tax returns.
• Pay final wages and deal with employees.
• Distribute or transfer company assets.
• Close the company bank account.
• Cancel VAT and PAYE registrations where applicable.
• Retain the company’s business records.

A company with debts may submit a strike off application, but the process does not automatically write those debts off or prevent creditors from taking action.

Companies House informs interested parties of the proposed strike off through The Gazette. Creditors can object if they are owed money and believe the company should remain on the register.

Potential objectors include:

• HMRC.
• Banks and finance providers.
• Trade suppliers.
• Landlords.
• Employees.
• Local authorities.
• Other individuals or organisations owed money.

If an objection is accepted, the strike off will usually be suspended. The company will remain active on the register until the objection is withdrawn, expires or the underlying matter is resolved.

Where the company is insolvent and cannot pay its liabilities, a Creditors’ Voluntary Liquidation may be more suitable. Unlike strike off, a CVL formally deals with creditors and is managed by a licensed insolvency practitioner.

The voluntary company strike off process can be broken down into six main stages.

1. Stop trading

The company should cease normal business activity. Directors may still complete tasks necessary to wind down its affairs, such as collecting debts and paying final expenses.

2. Deal with debts, taxes and employees

Outstanding matters should be resolved wherever possible. This includes notifying HMRC, submitting final returns, paying employees and dealing with money owed to creditors.

3. Distribute or transfer company assets

Cash, equipment, vehicles, property, domain names and intellectual property should be dealt with before dissolution.

Anything still owned by the company when it is dissolved may pass to the Crown as Bona Vacantia.

4. Apply to Companies House

Directors can apply online or submit the paper DS01 form. A majority of the company’s directors must approve the application.

The current Companies House fees are:

• £13 for an online application.
• £18 for a paper application.

Paper applications generally take longer to process.

5. Notify interested parties

Within seven days of applying, the company must send a copy of the application to relevant interested parties.

These may include:

• Creditors.
• Shareholders.
• Employees.
• Pension trustees or managers.
• Directors who did not sign the application.
• Anyone who may become a creditor after the application.

The company must also notify any new interested parties who arise while the application remains active.

6. Gazette notice and dissolution

If Companies House accepts the application, it publishes a notice in The Gazette announcing the proposed strike off.

Interested parties are then given time to object. If no valid objection is received, a further notice is published confirming that the company has been struck off and dissolved.

A straightforward voluntary strike off commonly takes around three months, although the exact timescale can vary.

The process includes:

1. Companies House reviewing the application.
2. Publication of the proposed strike off in The Gazette.
3. An objection period.
4. Publication of the final dissolution notice.

Applications may take longer where:

• A creditor objects.
• HMRC has outstanding queries.
• Information on the application is incorrect.
• Required parties were not notified.
• The company continues to trade.
• There are unresolved legal or compliance matters.

Directors should continue monitoring Companies House correspondence until dissolution has been formally confirmed.

Yes. HMRC can object if the company has unresolved tax affairs or outstanding liabilities.

Reasons for an HMRC objection may include:

• Unpaid Corporation Tax.
• VAT arrears.
• Outstanding PAYE or National Insurance.
• Missing tax returns.
• An ongoing compliance check or tax enquiry.
• Failure to notify HMRC that the company has stopped trading.

An HMRC objection does not necessarily mean the company can never be struck off. However, the underlying tax issue will usually need to be resolved before the process can continue.

Directors should not assume that submitting a DS01 application will make tax debts disappear. HMRC may object before dissolution or take steps to restore a company later where appropriate.

All company assets should be identified and dealt with before dissolution.

Assets can include:

• Money in company bank accounts.
• Property and land.
• Vehicles and equipment.
• Shares and investments.
• Refunds owed to the company.
• Trademarks and intellectual property.
• Websites and domain names.

When the company is dissolved, assets it still owns generally become Bona Vacantia and pass to the Crown.

Recovering them may require the company to be restored, which can involve additional expense and legal work. Directors should therefore close bank accounts and transfer or distribute assets before the strike off is completed.

Where a solvent company has substantial retained profits or assets, a Members’ Voluntary Liquidation may offer a more suitable and potentially tax-efficient closure route.

Directors do not automatically become personally liable for all company debts when a business is struck off. A limited company is a separate legal entity, and its liabilities usually belong to the company.

However, personal liability may still arise where a director has:

• Signed a personal guarantee.
• Received an unlawful distribution.
• Misused company assets.
• An overdrawn director’s loan account.
• Acted fraudulently.
• Breached their statutory duties.
• Continued trading improperly while the company was insolvent.

Dissolution does not remove an existing personal guarantee or automatically protect a director from claims relating to their own conduct.

The correct route depends on how the company was struck off:

• Court restoration: normally required where the directors voluntarily struck off the company. Former directors, shareholders, creditors and certain other interested parties may be able to apply.
• Administrative restoration: may be available where Companies House struck the company off, provided the eligibility requirements are met. The applicant must normally have been a director or shareholder, the company must have been trading when it was dissolved, and the application must usually be made within six years.

Court restoration applications can also generally be made within six years of dissolution, although different rules can apply to certain personal injury claims. Outstanding documents, fees and penalties may need to be dealt with as part of the restoration process.

Once restored, the company is generally treated as though it had continued to exist. Directors or creditors considering restoration should take professional legal advice because eligibility, costs and the required procedure depend on the circumstances.

Strike off and liquidation both close a limited company, but they are intended for different circumstances.

Strike off is likely to be more suitable where the company has stopped trading, has no significant debts and has already dealt with its assets and tax affairs.

Liquidation may be more appropriate where:

• The company cannot pay its debts.
• HMRC or other creditors are applying pressure.
• Employees are owed money.
• Assets need to be realised and distributed.
• The company has significant retained profits.
• Directors require a formal closure process.

An insolvent company may enter a Creditors’ Voluntary Liquidation, while a solvent company with distributable assets may use a Members’ Voluntary Liquidation.

Directors may be able to stop compulsory strike off by addressing the reason Companies House began the process.

This could involve:

• Filing overdue accounts.
• Submitting the confirmation statement.
• Updating the registered office address.
• Responding to Companies House correspondence.
• Providing evidence that the business is still active.
• Resolving outstanding compliance issues.

Creditors may also object if the company owes them money.

Prompt action is important. Allowing an active company to be dissolved can disrupt contracts, freeze bank accounts and cause its assets to pass to the Crown.