Are you considering closing down your company and wondering if strike off is the right route to take? This article explains that a strike off involves removing your company from the Companies House register. It’ll also help you understand the key differences between a compulsory and voluntary strike off.
We explain the steps you need to take to apply for voluntary strike off and why getting it right is important to avoid a fine or enforcement action.
Key takeaways
- Compulsory strike off is enforced by Companies House in specific circumstances.
- Voluntary strike off is chosen by the company: a majority of directors must apply.
- It’s illegal to apply for voluntary strike off if your company doesn’t meet the criteria.
What does “strike off” mean for a company?
If Companies House strikes a company off its register, it means the company has been closed for business, or dissolved, and no longer exists.
Compulsory vs voluntary strike off: Key differences
The most notable differences between the two types of strike off are outlined in the following table:
| Compulsory strike off | Voluntary strike off |
| Enforced by Companies House | Chosen by the company |
| Can have negative consequences for your reputation as a director | The majority of directors need to apply |
Only happens in three specific situations:
|
The company must qualify for voluntary strike off before an application is made. It’s illegal to apply for strike off if your company doesn’t qualify. |
What is a voluntary strike off?
A voluntary strike off is when you apply to Companies House (the UK registrar of companies) to have your company dissolved and struck off the register.
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The majority of your company’s directors need to apply for your company to be voluntarily struck off. For example, if your company has three directors, two must apply.
If your company has two directors, both must apply. If you are the only director of your company, you can make the application on your own.
When should you choose a voluntary strike off?
You should choose a voluntary strike off if your company is no longer needed. This could be because:
- The idea behind your company hasn’t worked
- The company’s directors plan to retire, and replacements can’t be found
- The company is a subsidiary that’s no longer required
- The company is dormant or no longer trading
Creditors and other third parties can still apply for the company to be put back on the register.
Does my company qualify for voluntary strike off?
It’s illegal to apply for strike off if your company doesn’t qualify, and you could be fined for doing so.
Your company must fulfil certain criteria to qualify for voluntary strike off.
It must:
- Have not traded, or sold any assets, over the last 3 months
- Have not changed its name
- Have not sold its core product(s) in the last 3 months. Your company can sell any equipment that’s no longer needed during this period.
- Not have ongoing payment agreements in place with any creditors, such as a Company Voluntary Arrangement (CVA)
- Not be threatened with liquidation
- Have only carried out activities that:
- Are related to applying for a strike off, such as taking professional advice
- Contribute to ending your company doing business, for example, settling any debts
- Are required to comply with statutory requirements
You can’t apply for strike off if your company is or may become subject to insolvency proceedings, or if your company has reached a compromise or arrangement with its creditors or shareholders, which is referred to as a section 895 scheme.
Sections 1004 and 1005 of the Companies Act 2006 cover all the circumstances in which you can’t apply for your company to be voluntarily struck off.
How do I apply for voluntary strike off?
Before you can apply for voluntary strike off, you need to officially end your company’s trading activities and close it for business. To do so, you must be able to pay your company’s debts: make sure all debts are settled before starting the application process.
Pre-application checklist
You should take the following action before you apply for voluntary strike off:
- Make sure your company hasn’t done any form of business over the 3-month period before you apply for strike off. If any business activity has taken place, it could make your application both unlawful and unsuccessful.
- File your final annual accounts and Company Tax Return with HMRC, stating that they’re the final set of accounts and that you’re dissolving the company
- Make sure your HMRC records are up to date and that you’re not owed any refunds. Once your company is dissolved, HMRC can’t issue it a refund.
- Cancel your VAT registration, if applicable
- You’re legally required to inform those who will be affected by the closure of your company. These are as follows, as applicable:
- Shareholders
- Creditors – including banks, lenders, and loan guarantors
- Employees and workers
- Customers and clients
- Suppliers and service providers
- Landlords or tenants
- Local authorities
- Managers or trustees of your employee pension fund
- HMRC and the Department for Work and Pensions (DWP)
- Consider selling your company’s assets, as once the company is dissolved, those assets will become the property of the Crown
- If your company has employees, tell HMRC it’s no longer an employer. Pay your employees’ final wages, including holiday pay and benefits, and check whether they’re entitled to statutory redundancy pay
- End any existing contracts, ensuring that you check the termination clauses and required notice periods
- Close your company’s bank account(s)
- Keep copies of your employers’ liability insurance policy and schedule
- Keep business documents for seven years after the company is struck off
Making your application
Once you’ve closed down your company, you can apply for voluntary strike off either online or using the DS01 paper form. You should only use the paper form if you’re unable to apply online. Online applications cost £33 and paper applications cost £44. Alternatively, you can use the 1st Formations Company Dissolution Service.
Who you must notify after applying
You must send a copy of the strike off application to the following people, as applicable, within seven days of submitting it:
- Shareholders
- Creditors
- Employees and workers
- Those in charge of the company pension
- Any company directors who did not sign the application form.
If anyone takes on any of these roles after the strike off application has been made, they must be sent a copy of it within seven days of them taking on that role.
Legal consequences of failing to notify
It’s a criminal offence if you don’t notify these people, and you could face an unlimited fine or even, in serious cases, up to seven years in prison. You could also be disqualified as a director for up to 15 years. As such, you should keep proof of postage to demonstrate compliance.
What happens after you apply
If Companies House is happy with your application, it will register it and add it to the public register of companies. Companies House will send an acknowledgement to the address given on the application, and it will also notify your company at its registered office address.
Companies House will also publish a statutory notice of the dissolution on the official public record, known as The Gazette, and allow at least two months for any objections to be raised. It will also add a copy of this notice to your company’s public record.
If there are no objections, Companies House will dissolve your company and strike it off the register. It will then publish a second notice that your company has been dissolved in The Gazette, and your company will no longer exist.
Withdrawing your application
If you change your mind about having your company struck off, or if it no longer qualifies for voluntary strike off, you should withdraw your application immediately. You can do this online or by post. Section 1009 of the Companies Act 2006 outlines the circumstances in which you must withdraw your application to dissolve your company.
Criminal offences related to the strike off process
The following actions are all criminal offences:
- Applying for strike off if your company doesn’t qualify
- Using misleading or false information to support your application
- Failing to send a copy of your application to the required people within seven days of making the application
- Not withdrawing your application if your company is no longer eligible for voluntary strike off
If you commit any of these offences, you could face a fine or criminal conviction. If you fail to send a copy of your strike off application to the required people within seven days, you may be subject to a seven-year jail sentence and face an unlimited fine. You could also be disqualified as a director for up to 15 years.
What is a compulsory strike off?
Compulsory strike off happens when Companies House begins the process of dissolving your company rather than you. Companies House may impose compulsory strike off in the following circumstances.
Your company isn’t trading or operating
Companies House may decide your company isn’t carrying on business if it doesn’t receive the required documents, like the confirmation statement or the annual accounts, or if the company doesn’t have any directors.
Companies House will try to contact your company to find out if it’s still in operation. If, after doing so, it believes your company isn’t trading, it will publish a notice on the official public record – The Gazette – stating its intention to strike your company off the register unless it’s provided with a reason not to do so. Companies House will add a copy of The Gazette notice to your company’s public record.
If Companies House isn’t provided with a reason not to, it will strike your company off the register two months after publishing its notice in The Gazette. It will then publish a further notice in The Gazette saying the company has been dissolved.
Your company was formed using misleading information
Companies House might strike your company off the register if it believes it was formed on a false basis. That is, if it has found false or misleading information in your application to register the company, or if it thinks that any of the statements you made when registering your company were false or misleading.
If Companies House decides your company was registered on a false basis, it will publish a notice saying so on the official public record, The Gazette. The notice will also say that the registrar intends to strike your company off the register unless it’s given a reason not to do so. Companies House will wait 28 days to receive a reason not to strike your company off before proceeding. After 28 days, it will publish a notice that your company has been struck off in The Gazette and, at this stage, your company will be dissolved.
Your company doesn’t have an appropriate registered office address
Your company’s registered office address has to fulfil certain criteria to be deemed appropriate by Companies House. You, or someone representing your company, must be able to receive post at that address and send confirmation of receipt of that post back to the sender.
If Companies House believes your company’s registered office address isn’t appropriate, it can change it to an address that it holds and maintains, called a ‘default’ address. You can either appeal this decision through the courts or, within 28 days, give notice to Companies House that you’ve changed your registered office address from the default address to an appropriate address.
What happens if you don’t change your registered office address?
If you don’t change your registered office address and give notice of the change within 28 days of the move to a default address, Companies House may begin the process of striking off the company. It will publish a notice on the official public record – The Gazette – and, unless it has a reason not to proceed, it will strike the company off the register within two months of publishing the notice.
How to prevent a compulsory strike off
You can prevent your company from being struck off the register by addressing the reason Companies House has for considering taking this action.
- If Companies House suspects your company is no longer in business, reply to its enquiry letters quickly and send it the required documents as soon as possible
- If the registrar suspects your company was formed on a false basis, provide evidence that this isn’t the case
- If Companies House has moved your registered office address to a default address, change it to an appropriate address and tell Companies House that you’ve done so. Give evidence that the new address meets the ‘appropriate’ criteria and that you either own the address or are allowed to use it.
Why you should avoid compulsory strike off
Some of the actions, or failures to take action, that lead to compulsory strike off are a criminal offence. The authorities could take enforcement action against you as a director of your company, or any of your fellow directors. For example, it’s a criminal offence not to submit a confirmation statement or annual accounts.
If Companies House strikes your company off the register, it could damage your reputation as a director. It could make it hard for you to set up a new company in the future or serve as a director of an existing company. You could even be disqualified as a director.
Legal and financial implications of being struck off
Once your company is dissolved, its assets become the property of the Crown. Your company’s bank account will also be frozen: it won’t be able to receive payments and any funds in it will also be passed to the Crown.
If your company continues to trade after it’s been struck off the register, you, your shareholders and any other directors of the company could be considered as trading without limited liability protection and be held personally liable for the business’ debts.
Need help closing your company the right way?
There’s a lot to consider when you’re deciding whether to apply for your company to be struck off, or when you’re responding to a compulsory strike off notice. If you understand the rules and the steps to take in each situation, you’ll be well-positioned to stay compliant and avoid significant penalties.
If it all feels overwhelming, 1st Formations can help. Our Company Dissolution Service provides expert guidance through every step of the process, so you can close your company with confidence and peace of mind.
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