If you want to close down a solvent limited company that has not traded for at least three months, applying to have it struck off the Companies House Register could prove to be a cost-effective alternative to liquidation.

1. What is the Striking Off
Process for a Limited
Company?

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Introduction
If you want to close down a solvent limited company that has not traded for at least three months,
applying to have it struck off the Companies House Register could prove to be a cost-effective
alternative to liquidation.

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What does it mean to Strike Off a Company?
 Striking off is the process by which a limited company is removed or ‘struck off’ the Companies House Register.
 Once the company is removed from the register, it ceases to exist and can no longer trade, make payments or sell assets.
 A notice will be published in the Gazette giving interested parties three months’ notice that the company intends to be struck off. If
there are no objections during this time, the business will be struck off.
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What happens if my Company is Struck Off?
 It will take at least three months from the date you submit the completed DS01 form for your company to be struck off the Companies
House register.
 Assuming you have completed the form correctly and there are no objections from interested parties, you will receive an
acknowledgement from Companies House in the post that your company has been struck off.
 From that point on, your business will cease to exist.
 Your business name will be free for other companies to use and you will not be able to be to engage in any business activities
without a serious risk of legal repercussions such as financial penalties, a directorship ban and personal liability for company debts.
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What Should a Company do before it is Struck Off?
There are a number of things you should do before you commence the strike off process.
They will depend on the size and nature of your business and may include:
1.Completing all outstanding work and collecting monies due
2.Making staff redundant and paying their final wage along with any other monies due
(holiday entitlement etc.)
3.Selling company assets and inventory and distributing the proceeds among the
shareholders
4.Preparing final accounts and a company tax return and sending them to HMRC and
Companies House. You should state very clearly that these are the final accounts as the
company will soon be dissolved
5.Paying HMRC any tax liabilities due (VAT, PAYE, NI or Corporation Tax)
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Why are Companies Struck Off Voluntarily?
There are a number of different reasons why a company director might choose to have their company struck off the Companies House
Register. Here are a few common examples:
•The directors want to retire – A business owner who has no natural successor and wants to retire might choose to close their
might choose to close their business by striking it off. They may want to focus on a new challenge or simply enjoy their retirement.
•A group of companies is being reorganised – Another common reason for voluntary strike off is to reorganise a group of companies,
reorganise a group of companies, where one business has effectively become obsolete and its assets have been transferred
elsewhere.
•The business isn’t profitable – The strike off procedure cannot be used to closed down an insolvent business. However, it can be
business. However, it can be used to close down a solvent business that is not as profitable as it was hoped and cannot be scaled
effectively.
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•The directors don’t agree – It’s not unusual for the directors or shareholders of a limited company to
have different ideas about the direction it should go in. If there are disagreements that cannot be
option.
•It’s time to call it a day – Although the business might be solvent now, there can be challenges on
the horizon, such as changing regulations, a new market entrant or declining sales which make you
business down.
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How much does it cost to Strike Off a Company?
 The process itself is very cheap. All you have to pay is a £10 disbursement fee to Companies House when submitting the striking off
application form (DS01) offline or £8 when it’s submitted online.
 That makes it far cheaper than a Members’ Voluntary Liquidation (MVL), the process used to close down a solvent company which
has more valuable assets. An MVL typically starts at around £1,500.
 Importantly, you must not send a cheque or pay the fee from the account of the company applying to be struck off or it will be classed
as still trading.
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Can you Strike Off a Company with Debts?
 Companies must be solvent in order to be struck off.
 If the company does have outstanding 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.
 If an application to strike a company off the Companies House Register is
rejected due to its outstanding debts and the business cannot afford to repay
those debts, it will be viewed as insolvent
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Can a Struck Off Company be Reinstated?
 Usually it can, yes. However, having a company reinstated to the Companies House Register is not always a simple process and it
may require a court order, depending on how it was struck off in the first place.
 In the case of a voluntary strike off, court action will be required to reinstate the company.
 will involve a long-winded process that typically costs £500 to £800 plus additional costs and takes around four months.
The directors or shareholders might choose to reinstate the company to the register so they can:
•Recommence trading
•Realise an asset
•Pay a claim made against the business (e.g. for a personal injury)
•Complete a lease or property transaction
•Realise pension funds
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Can I Stop my Company Being Struck Off?
 The compulsory strike off process is usually initiated by Companies House in response to a failure to file accounts or an annual
confirmation statement.
 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.
 At this point, 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
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Common Third-Party Objections to Strike Off
 Any interested party can object to a strike off proposal. 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.
Common-third party objections include:
•The directors have not informed all interested parties of the proposed strike off (members, employees, company creditors, managers or
trustees of the company pension fund)
•The company has been trading wrongfully
•The company has not complied with the conditions of the strike off application
•One or more of the declarations on form DS01 is false
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What Happens to Share Capital when a Company is Struck Off?
 One of the risks associated with the compulsory strike off process for a limited company is that you will not have the opportunity to
realise and distribute the assets and share capital before the company is dissolved.
 That would leave you in a powerless position once it has been struck off.
 Before the company is struck off, whether it’s a voluntary or forced strike off, its share capital, reserves or any other assets should be
distributed to its creditors and shareholders accordingly.
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Can a Dissolved Company be Investigated?
 It is possible for a company that has been dissolved to be effectively brought back to life by a creditor with a claim against the
company and for the conduct of the company directors to be investigated.
 As the company directors are unlikely to restore the company themselves, it’s most likely to be creditors who will restore the
company via the court route.
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Can I Strike Off my Company Online?
 The fastest way to strike off a company is to apply to do so online. Follow this link to start the strike off process.
 You have 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.
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