Businesses close for a variety of reasons and its not always clear which is the best route to take. There are different options available dependent upon the financial position of the business.

At Restart BTi we help UK company directors with issues such as cash flow or HMRC pressure and concerns around Bounce Back Loan or Coronavirus Business Interruption Loan Scheme repayments, so you can be sure of straight-forward knowledgeable advice at what can be a difficult time.

Voluntary Striking Off

If you want to close down a solvent limited company that has not traded for at least three months, applying to Companies House to have it struck off may be a more cost-effective alternative to liquidation. The process is cheap and to submit a DS01 form online only costs £8 or £10 by post. Once a company is removed or “struck off” the companies House register it cease to exist and is no longer able to trade.

Where can I find more guidance about striking off my company?

The form and relevant guidance can be found at Strike off your limited company from the Companies Register: Overview – GOV.UK (www.gov.uk)

Why Might I want to Strike off my Company?

• Company or Group reorganisation
• You may be looking at retirement or considering other business opportunities.
• You may no longer agree with a fellow director and if the issues can’t be resolved closure may be the only option
• You may be facing a change in the market, a new competitor, falling sales which could leave the company insolvent further down the line

Benefits of Striking Off My Company

• A cheaper option than a formal insolvency
• You remain in control of the process without any external interference
• A quick and easier process

How do I Voluntarily Strike Off My Company ?

The process is fairly simple and complete yourself or with the assistance of your accountant by filling out a DS01 form. A notice will then be published in the Gazette allowing any interested parties three months’ notice that the company is looking to be struck off. If there are no objections from the date the DS01 form was submitted, the business will be struck off.

Common Objections to the Striking Off Process

• The company has failed to comply with the conditions of the strike off application
• Outstanding creditor such as a supplier, HMRC or Bounce Back Loan with a Bank
• False declarations on form DS01
• Action is being undertaken to recover money owed from the company. For example, action through the courts or a winding up petition
• The directors have not informed all interested parties of the proposed strike off
• HMRC interest or investigation

If the DS01 has been completed correctly and no objections have been received, you will receive an acknowledgement from Companies House in the post that your company has been struck off

Once struck off business will cease to exist. The name of the business will be available for other companies to use and you will no longer be able to be to engage in any business activities. Doing so may expose you to the risk of legal repercussions such as disqualification and personal liability for company debts.

If the company did have any assets that have not been distributed to the shareholders before the company is struck off, their ownership will be transferred to the Crown ‘Bona Vacantia’. The only route to access these assets is to restore the company.

My To Do List

Prior to commencing the striking off process you should check that you have completed the following:-

• Collected all monies due to the company
• Completed any customer works or contracts
• Paid the company’s outstanding debts
• Sold all of the companies assets and distributed any proceeds amongst the shareholders
• Dealt with staff redundancy and paid final wages along with any other entitlements
• Prepared final accounts and a company tax return sending them to HMRC and Companies House.
• Paid HMRC any tax liabilities due (VAT, PAYE, NI or Corporation Tax)
• Closed down the company’s payroll scheme
• Closed down he company’s pension scheme
• Deregistered the Company for VAT with HMRC
• Closed the company bank accounts
• Dealt with any other company business e.g. closed or transferred website domain names, brought utilities and other services to an end

What is a Compulsory Striking off ?

In some cases, Companies House can instigate the striking off process. Compulsory strike off typically occurs for non-compliance reasons and is generally the result  failings to file the company’s annual accounts and/or confirmation statement.

There can be a number of consequences for the directors of companies that are struck off compulsorily.

These could potentially include:

• The company ceases to exist as a legal entity
• Undistributed assets of the company become the property of the crown
• The company will be unable to secure funding to rescue the situation
• Future contracts with customers and suppliers will be at risk
• Directors could be disqualified for a period of up to 15 years
• The directors and shareholders could be made personally liable for the business’s debts if they continue to trade

Its important that accounts and confirmation statements are submitted on time and companies house should be notified of any changes to the business e.g. a change of the business address.

What’s the difference between strike off and a solvent liquidation (Member’s Voluntary Liquidation?)

Having a company struck off the register and dissolved is very different from a solvent liquidation. Strike off is a relatively short and informal process with little administration. It can be completed by the company directors themselves and costs as little as £8.

A solvent liquidation or Members ‘Voluntary Liquidation (MVL) is a formal process for winding up a solvent business that have surplus funds in excess of £25,000.  A solvent liquidation enables a company to return its capital to shareholders in the most tax efficient way.  This process must be carried out by a licensed insolvency practitioner. It costs upwards of £1,800 +VAT. An MVL is tax efficient and typically takes up to six months to complete.

Although Striking Off and a Members’ Voluntary Liquidation are both ways to close a business down, there are many differences between them. See our Members Voluntary Liquidation  page for further information regarding the process.

Can I strike off my company if I have debts?

The short answer is no. Companies must be solvent in order to be struck off. If the company does have outstanding debts, they must be repaid in full before the company can be struck off. If the company is currently undergoing an insolvency procedure such as a Company Voluntary Arrangement or has been threatened with legal action such as a winding up petition, it cannot be struck off.

If the business is insolvent and cannot discharge its debts, we can assist the directors in taking steps to place the company into Creditors’ Voluntary Liquidation (CVL).

 I’m still sure what the most appropriate route for me?

Closing a business can be a complex process and sometimes it just better to pick up the phone to understand which route is best for you.

There are number of unregulated advisors and brokers offering solutions; unqualified advice may not offer the correct solution and could lead to the process taking longer than necessary with more costs being incurred. Contact our experienced team for a free  no obligation consultation for directors that want to close their business with confidence. Call us today on 01246959388 or send a message  via our contact page and we can call you back at a time to suit you.