Reviewed: 23rd October 2018
There are two ways a company can be stuck off the register at Companies House, either voluntarily should the directors decide they have no further use for the company, or alternatively a third party could petition for its compulsory dissolution. In instances of compulsory strike off, this process is typically initiated by Companies House due to non-filing of accounts or annual confirmation statement. The strike off request will be published in the Gazette, at which point there is a two month period where anyone can object to the application or else the company will be struck off the register.
If your company has been issued with a notice for compulsory strike off, your next move will be determined by what your plans are for the company going forwards. If the company no longer serves a purpose to you and you would be happy with it being closed down then you can simply allow the process to run its course. However, you should be aware that the strike off application may well be objected to if your limited company has outstanding debts or liabilities. You can read more on strike off objections below.
Alternatively, if you want your company to remain active, then you will need to lodge a suspension application to Companies House yourself to request that the strike off application is shelved. Depending on what lead to the compulsory notice being issued in the first place, you may be required to bring your account up to date which may include filing missing accounts or confirmation statements.
As well as you and your fellow shareholders being able to submit an objection to the proposed strike off, the application can also be opposed by an outstanding creditor, including HMRC. As creditors it is within their interests to object to the application, as should it go through unchallenged and your company is subsequently removed from the Companies House register, it will cease to exist as a legal entity and therefore they will be unable to recover the money your company owes. Creditors will then have no option but to class this borrowing as ‘bad debt’ and write it off.
If the strike off objection is upheld your company will remain active and trade can continue as usual. However, it is always wise to get to the root of the issue of why your company was threatened with strike off in the first place. Companies House will not hesitate to start the process again should you continue to fail in your duties as company director. By the same token, HMRC or any other creditor is also likely to object to any future strike off application should you still owe them money. In this instance you should contact an insolvency practitioner who will be able to talk you through the various ways of closing your insolvent company down in the correct manner.
When a company is dissolved, the result is that it ceases to exist as a legal entity and as a result its assets and cash will be deemed ‘bona vacantia’, literally ‘ownerless property’, and possession will automatically transfer to the Crown.
Obviously if you have assets in your company, you will be keen to extract these in order to retain ownership of them. Should this be the case, you will need to submit an objection to the strike off detailing the reasons why. If the objection is upheld then the company will remain active giving you the chance to either continue trading or moving the assets out of the business. If you are considering doing this, you should enlist the help of a professional to assist you.
Depending on the scale of the assets involved, you may wish to consider closing down your business through a Members’ Voluntary Liquidation (MVL). By proceeding down this route you may be able to take advantage of Entrepreneurs’ Relief (ER) which is the most tax-efficient way to extract the money from your company. This must be done under the guidance of a licensed insolvency practitioner.
If your company has been subject to a Gazette notice for compulsory strike off, or you are concerned about the financial health of your business, you should make it a priority to contact a licensed insolvency practitioner. There are various ways of dealing with your company’s financial woes; however, time is very much of the essence. Addressed early and you can significantly increase the chance of a successful outcome for both you and your company. Contact Real Business Rescue today on 0800 644 6080, for a free no-obligation consultation with Our extensive office network comprises 55 offices across the UK with a partner-led service offering immediate director advice.
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