How to Strike Off A Company
Dissolution, company strike-off, and liquidation are all terms used to describe the process of closing a limited company.
Understanding how to close a limited company is dependent on several factors, including your reasons for wanting to do so.
You may be preparing to retire, releasing assets from an existing company to fund a new venture, or closing a subsidiary company that no longer serves a purpose. Alternatively, the business may not be able to pay its bills, is insolvent and needs to close.
Of course, whether you can pay your bills or not is an important factor in how your company closes – but to close a company, you must have the agreement of all company directors and 75% of the shareholders.
How to Dissolve a Limited Company After a Strike Off Notice
If you can pay your bills, a Company Strike Off is usually the cheapest and most efficient way to close a business. You can ‘Strike Off’ a company by submitting a DS01 form, also known as a Voluntary Strike-Off. So, pay your creditors, stop trading for 3 months (if you haven’t already) and then you can dissolve the company.
A Compulsory Strike-Off occurs when a third-party petitions for your company’s closure. The failure to return accounts or annual statements usually triggers this third party, which is usually Companies House.
If your company is unable to pay its bills, it is insolvent. In this case you have a duty to your creditors not the shareholders. This is enshrined in the Companies Act 2006.
A strike-off is not the same as formal liquidation.
If you do not pay your creditors, your company may be forced into liquidation either via compulsory or you will need to do a voluntary liquidation.
Allowing your business to go dormant
You can let your business go ‘dormant’ as long as it is not trading. This means you can’t receive any income or conduct any business activity – but you still have to send your annual accounts and confirmation statement to Companies House. A limited company can be inactive for as long as you want.
How to Dissolve a Limited Company and undergo a Voluntary Company Strike-Off
Closing the company is not a quick and straightforward and the time it takes will depend on the size and complexity of your company. Before you begin the Strike-Off or dissolution process, there will be formal steps you must take. Our checklist includes the following items:
Paying employees their final pay or lay them off.
Complete all outstanding work and collect any outstanding fees.
Sell any company assets and divide the proceeds among shareholders.
Terminate all utilities contracts
Move out of any premises and settle any rent.
Website closed and domains transferred to individuals – Remember if you take over the domains personally then you should pay for them.
Prepare final company accounts and tax returns and send them to HMRC and Companies House, informing them in a letter signed by directors that you wish to close the company.
Pay any tax owed to HMRC if you have the funds. VAT, Corporation Tax, PAYE, NI, etc.)
Request that HMRC close your payroll.
Close all corporate bank accounts.
Depending on the type of business, you may have additional obligations to meet when closing a company.
You should sell off any assets before submitting a DS01 form. If your company is officially struck off the register and cash and assets remain, they become what is known as “Bona Vacantia” which means it is owned by the Prince of Wales, and you have no legal claim to them.
What is the DS01 form?
Submitting a DS01 form to Companies House is the next formal step in the Strike-Off process. This is a simple form that requires the following information:
Company identification number
Name of the company
Officer signatures authorising the Strike-Off
Companies House will review the information and respond by post with confirmation. Then, depending on where your company is located, they will publish a notice in the London, Edinburgh, or Belfast Gazette (the official journals of record in the United Kingdom). After that, interested parties have three months to object to the Strike-Off. This is why it is critical to keep accurate records and pay all debts.
Making use of a DS01 form
Before you submit a DS01 form, when closing a limited company, there are several conditions. In the three months prior to the submission, you must have not done the following.
Changed the name of your company
Engaged in activities other than those related to the company’s dissolution or legal requirements.
What is the cost of a DS01 form?
The DS01 form is a relatively low-cost component of the process. When completed on the Companies House website, the form costs £10 and is reduced to £8. Take care not to pay this out of your own pocket. Send the money to Companies House.
Eligibility for Voluntary Strike-Off
To be eligible for a Voluntary Strike-Off, you must meet certain requirements, which are dependent on whether you owe money. They are as follows:
There are no outstanding liabilities.
There can be no petition for dissolution or other insolvency proceedings.
Outside arrangements with creditors, such as a Company Voluntary Arrangement, are not permitted.
The most important of the preceding points is that your company must not have any outstanding liabilities. If it does and you are unable to pay them, you are insolvent and may be forced into liquidation.
Who should I notify about a Company Strike-Off?
You must notify interested parties that you have submitted a DS01 form within seven days of it being received by Companies House. Parties who have been notified include:
Shareholders (also known as members) (also known as members)
Directors who failed to sign the DS01 form
Creditors are the managers or trustees of a pension fund established for employees.
What if I don’t notify interested parties?
If you do not follow these steps or any of the processes outlined in the Strike-Off, you may face prosecution or a fine. It will also cause the strike-off to be delayed, and potential parties who were previously unaware of the strike-off may now object.
The company is officially dissolved and ceases to exist three months after the notice is published in the Gazette by Companies House and three months have passed without any objections.
After that, a second notice is published in the Gazette confirming that the matter has been resolved. Make certain that no cash or assets exist at this point, or they will become the legal property of the Crown.
How soon after a Strike-Off can I start another business?
There is nothing that prevents you from starting another company after the company has been dissolved. You may also start again with the same name. This is not possible if the company has gone into liquidation.
How to Dissolve a Non-Trading Limited Company
If your limited company is dormant or has never traded, it should be simple to dissolve.If it has outstanding liabilities but has never traded, liquidation may be appropriate (i.e., an initial loan). A company dissolution application could also be considered.
When a company has never traded, an application for dissolution of your limited company would be appropriate. This is due to the fact that it is very likely to have no assets and no current or contingent liabilities.