Company Strike Off and Dissolution Explained: UK Process, Requirements & Alternatives

Closing a company in the UK is a significant decision, often driven by reasons such as the business becoming dormant, no longer being needed, or having fulfilled its purpose. Directors may find the process daunting, especially with concerns about adhering to legal requirements and avoiding penalties. Strike off is frequently viewed as a straightforward option; however, it comes with strict rules and potential consequences. It’s crucial to carefully consider eligibility and legal obligations before proceeding. 

Missteps can lead to penalties, restoration of the company, or further legal consequences, so understanding the process thoroughly is essential for a smooth and compliant closure.

At a Glance

• Company strike off is the process of removing a company from the Companies House register; dissolution is the legal result, meaning the company ceases to exist
• Strike off can be voluntary (applied for by directors) or compulsory (initiated by Companies House)
• Voluntary strike off is only suitable where the company has stopped trading and meets strict statutory conditions
• A company must not have traded, changed its name, or disposed of assets improperly in the three months before applying
• Directors must notify all interested parties (including HMRC and creditors) within 7 days of submitting the strike-off application
• Creditors and HMRC can object to a strike off, usually preventing removal for up to six months
• Dissolution does not erase debts; if the company is restored, all liabilities revive
• Any assets left in the company at dissolution usually pass to the Crown as bona vacantia
• Employees must be paid all wages and entitlements before strike off; the National Insurance Fund does not apply
• Companies can be restored administratively or by court order, typically within six years
• Strike off is not an insolvency procedure and must not be used to avoid debts
• Where strike off is unsuitable, alternatives include MVL, CVL, administration, or a CVA

Defining Company Strike Off and Dissolution

In the UK, company strike off is the process by which a company is removed from the Companies House register. Dissolution is the legal outcome of that process, meaning the company ceases to exist as a legal entity. This process is governed by Part 31 of the Companies Act 2006, particularly sections 1000 to 1008 and 1024 to 1029. Once a company is dissolved, any remaining assets generally become bona vacantia and pass to the Crown.

A strike off can be voluntary or compulsory. Voluntary strike off is initiated by the directors, usually when the company has stopped trading and its affairs have been properly settled. It is not an insolvency procedure and should not be used as a substitute for formal insolvency processes.

When a company is dissolved, it no longer exists in law. Directors must ensure that all required matters are dealt with before applying for strike off, as dissolution does not prevent future action if the company is restored. Understanding these distinctions helps directors choose the appropriate method for closing their company while complying with legal requirements.

When Voluntary Strike Off Is Possible and When It’s Not

A voluntary strike off is commonly used by companies that are no longer trading. To apply, certain statutory conditions must be met. In particular, the company must not, in the previous three months, have traded, changed its name, or disposed of property or rights for value other than in the normal course of closing the business. There must also be no ongoing insolvency proceedings.

Key eligibility checks include:

• The company has not traded or carried on business in the last three months.
• No disposal of assets or rights for value has taken place in the last three months (other than as part of closing the company).
• The company has not changed its name in the last three months.
• The company is not subject to insolvency proceedings.
• Interested parties are properly notified of the application.

Companies with unresolved debts or disputes may face objections to strike off. Directors must ensure the information in the application is accurate, as providing false or misleading information can result in penalties under the Companies Act 2006.

Key Risks and Consequences of Incorrect Closure

Applying for a company strike off when the statutory conditions are not met can lead to serious consequences. Creditors, including HMRC, may object to the application. If the company is struck off despite unresolved issues, it may later be restored to the register, reviving its liabilities.

HMRC and other creditors can object to a strike off if taxes or other debts remain unpaid. If an objection is successful, the company will not be struck off and removal is usually suspended for up to six months. Misuse of the strike-off process can result in fines or other enforcement action under the Companies Act 2006.

Directors should be aware that dissolution does not protect against future scrutiny if misconduct is later identified. Ensuring all obligations are settled before applying for strike off significantly reduces these risks.

How to Voluntarily Strike Off Your Company

To voluntarily strike off your company, follow these steps carefully to ensure compliance with legal requirements and avoid potential issues.

Step 1: Confirm Eligibility

Before proceeding, ensure your company meets the statutory conditions. It must not have traded, disposed of assets improperly, or changed its name in the last three months, and must not be subject to insolvency proceedings.

Step 2: Notify Interested Parties

You must send a copy of the strike-off application to all relevant interested parties within seven days of applying. This includes:

• Creditors
• HMRC
• Shareholders
• Employees (if applicable)

Step 3: Settle or Distribute Assets

Ensure the company’s affairs are properly concluded. This includes:

• Closing bank accounts
• Distributing remaining assets lawfully
• Settling outstanding liabilities
  

Step 4: Prepare Final Accounts and Tax Returns

If the company has traded, final statutory accounts and any required Company Tax Returns should be submitted to HMRC before applying for strike off.

Step 5: Submit DS01 Form

Submit form DS01 to Companies House, signed by a majority of directors. The fee is £33 if submitted online or £44 if submitted on paper (fees are subject to change). Companies House will then publish a notice in the Gazette.

Step 6: Wait for Objections

The Gazette notice will state when the company is due to be struck off, typically within around two months. During this period, objections may be raised by interested parties.

Step 7: Gazette Notices

The first Gazette notice proposes the strike off. If no objections are upheld, a second notice confirms dissolution. The company ceases to exist from the date of that second notice.

Step 8: Withdraw Application if Necessary

If circumstances change, such as the company resuming activity, the application must be withdrawn using form DS02.

How Compulsory Strike Off Occurs

Compulsory strike off is initiated by Companies House when it has reasonable cause to believe a company is no longer carrying on business or has failed to meet statutory filing obligations, such as submitting accounts or confirmation statements.

The Registrar publishes a notice in the Gazette giving the company an opportunity to respond or bring its filings up to date. If no action is taken, a further notice is published confirming dissolution. Once dissolved, the company ceases to exist legally.

Directors should act promptly if they receive strike-off warnings, as compulsory strike off can result in loss of control over assets and may raise concerns if the company is later restored.

What Happens to Debts and Dealing with HMRC Objections

Creditors and HMRC can object to a voluntary strike off if there are outstanding debts or unresolved matters. Objections must be made before the strike-off date stated in the Gazette notice.

If an objection is accepted, Companies House will suspend the strike off, typically for up to six months. This allows time for issues to be resolved or for alternative procedures, such as liquidation, to be considered.

HMRC frequently objects where tax liabilities remain unpaid. Directors should ensure all tax affairs are settled before applying for strike off to reduce the risk of delay or restoration.

Bank Accounts, Assets, and Bona Vacantia

When a company is dissolved, any remaining assets, including bank balances and property, usually pass to the Crown as bona vacantia. These assets do not pass to directors or shareholders.

Bank accounts are typically frozen once dissolution occurs. Any funds left in the accounts, or received after dissolution, may be transferred to the Crown. Directors should ensure all assets are properly dealt with before applying for strike off.

If a company is later restored, reclaiming bona vacantia assets usually requires additional steps and may involve costs or formal waivers.

Handling Employees Before Dissolution

Before dissolving a company, directors must ensure all employee obligations are met. This includes paying outstanding wages, holiday pay, and any contractual or statutory entitlements.

Employees cannot usually claim from the National Insurance Fund following a strike off, as this fund is linked to formal insolvency procedures. Directors should therefore ensure all employee payments are resolved before applying for dissolution.

Failing to address employee matters properly can lead to disputes or claims if the company is restored.

Restoring a Dissolved Company (Administrative vs. Court)

A dissolved company can be restored to the register in certain circumstances.

Administrative Restoration

Administrative restoration is available where the company was struck off by the Registrar. An application must generally be made within six years of dissolution. A former director or shareholder can apply by submitting form RT01, paying the fee, and filing any outstanding documents. If assets become bona vacantia, steps may be required to recover them.

Court Restoration

Court restoration is required where the company was struck off following a directors’ application or where administrative restoration is not available. An application must usually be made within six years. If the court orders restoration, the company is treated as if it had continued to exist without interruption.

Consequences of Restoration

Restoration reinstates the company’s legal existence. Any liabilities, obligations, and legal proceedings revive as if the company had never been dissolved.

Alternatives to Strike Off: Liquidation and More

Where strike off is not appropriate, other lawful options exist.

Members’ Voluntary Liquidation (MVL) is suitable for solvent companies and allows assets to be distributed to shareholders under a formal process.

For insolvent companies, Creditors’ Voluntary Liquidation (CVL) provides a structured way to deal with debts and close the company.

Administration and Company Voluntary Arrangements (CVAs) may allow a business to restructure or be rescued under professional supervision.

Strike off should not be used to avoid debts, and choosing the correct procedure helps protect directors and creditors.

Clearing Up Common Misunderstandings

A common misunderstanding is that debts disappear when a company is struck off. In reality, if a company is restored, its liabilities revive.

Another misconception is that the strike-off process removes all future risk. Directors can still face consequences if false information was provided or misconduct is later identified.

Strike off is an administrative process, not a way to escape obligations. Directors must comply with statutory requirements throughout.

Deciding Your Next Step

Before proceeding with a strike off, confirm your company meets the statutory conditions. If debts or unresolved issues exist, liquidation or another formal process may be more appropriate.

Seeking professional advice can help ensure compliance and reduce risk. Taking the correct route protects both directors and creditors and avoids future complications.

FAQs