Striking off a limited company is a relatively simple process and is often wrongly considered the same as liquidation. Whilst they are related, formal liquidation differs from dissolution. It is an effective way to dissolve a company that is solvent and has not traded, changed names or sold any property or rights in the last three months. The process is also one you, the company director, can complete yourself, which helps to keep the costs down.
So, if you are planning to retire, want to close a subsidiary company or would like to free up assets from an existing company to fund a new venture, this is what you need to know.
How does the Company Strike off Process work?
The procedure to strike off a company involves completing and submitting form DS01 (available online) along with a cheque for £10. However, before that can be done, you need to prepare the company for striking off, as failure to do so can lead to claims from employees, creditors and shareholders in the future. Exactly what you need to do depends on the nature of your business but will include some or all of the following steps:
(1) Make sure you have everyone’s agreement to Strike the Company Off
Before you start closing down a limited company you need to get the agreement of the company’s directors and shareholders. That can be done by arranging a board meeting to pass an ordinary resolution in writing to apply for the company to be struck off. Minutes of the meeting should be taken that state the company has paid or will pay all its outstanding debts or obligations and a Declaration of Solvency will need to be signed by the company directors.
(2) Collect any outstanding payments due
You should attempt to collect any remaining payments before announcing your intention to close the business. If you don’t, some debtors may try to delay paying you the money they owe. Offering discounts for the immediate repayment of ageing receivables or selling payments you are struggling to collect to a factor could speed up the process.
(3) Complete all outstanding work and pay creditors
All work must be completed and any money you owe should be paid to your creditors. If you have outstanding contracts with customers then they must be fulfilled or an early termination should be negotiated. You will be held personally liable for any work not completed or creditors who make claims for payment once the company has been dissolved, so you must make sure all this resolved.
(4) Sell any assets and inventory
If you have any remaining stock then now is the time to sell it. You should also sell company assets so you can pay all debts, taxes, employees and loans before distributing any remaining money to the owners.
(5) Inform HMRC
Now you need to advise HMRC of the impending closure by submitting a final set of accounts and a company tax return along with letters confirming the situation from shareholders and directors. If the directors and shareholders are one and the same then a single letter will suffice.
The final balance of PAYE, NI, Corporation Tax and any other tax liabilities should be paid to HMRC and you should deregister for VAT if relevant. You should also pay any staff their final wages and salary before asking HMRC to close down the company’s payroll scheme.
(6) Inform Companies House and complete and submit form DS01
The next job is to send the resolution and the Declaration of Solvency to Companies House within 15 days of it being passed. You should also complete and submit form DS01 along with a £10 filing fee. This must be signed by all directors or the majority of directors if there are three or more.
On receiving form DS01, Companies House will check everything is correct and provide confirmation in the post. A notice will then be published in the London, Edinburgh or Belfast Gazette (depending on where the business is based) giving three months’ notice of the intent to strike off and inviting objections from interest parties.
(7) Notify interested parties
You must send a copy of form DS01 to all interested parties within seven days of it being sent to Companies House. That includes:
- Company creditors
- Any directors who did not sign the original form
- Managers or trustees of any pension fund created for employees
(8) Tie up any other loose ends
Now is the time to tie up any other loose ends. That includes closing your business bank accounts, cancelling any licenses you may have, transferring website domains and bringing utilities and any other monthly services to an end.
(9) The company is dissolved
If there are no objections to the notice in the Gazette after three months then a further notice will be published confirming the dissolution of the company. The company will then cease to exist.
(10) Liability of directors’ continues
Although the company no longer exists, the liability of every director, officer of the company and shareholder continues and the Court may reinstate the company if any creditor claims are made. At this point, if the company trades, changes its name, disposes of assets or enters into an insolvency process then the striking off application will be withdrawn.
(11) Any assets not distributed belong to the Crown
Once dissolved, any remaining assets that have not been distributed belong to the Crown.
Do You Need help with the Companies House Strike off Process?
Are you looking for help with the Companies House strike off process? Perhaps you’re not sure which is the best way to close your company down? For confidential, no-obligation assistance, please get in touch with our team.