What is Company Strike Off & Dissolution?
The Company Strike Off process is a way of formally dissolving a company, this is also referred to as Company Dissolution.
A voluntary company strike off process can be initiated by the directors of the company, or a compulsory strike off by Companies House. Once a company has been struck off, it no longer exists and all assets are transferred to the Crown.
Why would a Company be struck off?
There are a number of reasons why a company might be struck off, including failure to file annual returns, failure to pay Company Tax or other debts, or if the company is no longer trading.
If you are a director of a company that is facing dissolution, it is important to seek professional advice as there are a number of steps that need to be taken in order to minimise your liability.
How to voluntarily strike off a Company?
If a company is no longer trading and has no outstanding liabilities, then a director/s can complete a DS01 form and send this through to Companies House for a voluntary strike off. There is a small charge of £10, after which the form will be assessed and a notice will be published in the Gazette. If there is no objection within 2 months, the company will be struck off the register.
If is an offence to make a dishonest application, which could lead to a fine or possible prosecution.
Changes to Strike Off from December 2021
The Government has extended the powers of the Insolvency Service on behalf of the Business Secretary, to investigate and disqualify company directors who abuse the company dissolution process. The measures have been introduced in the Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Act. The legislation will cover England, Scotland, Wales and Northern Ireland. The Act received Royal Assent on 15 December 2021 and will help tackle directors dissolving companies to avoid repaying Government backed loans put in place to support businesses during the Coronavirus pandemic.
Under the new measures, the Insolvency Service will have the power to investigate and disqualify company directors who abuse the company dissolution process. This will help to protect the public and ensure that those who break the law are held accountable.
The Act will also make it easier for the Insolvency Service to take action against directors of dissolved companies who owe money to the Government.
The Company Strike Off process is a serious matter and should not be undertaken lightly. For Directors thinking of striking off their company to potentially evade liabilities, it may be wise to take advice and discuss their options. If you feel a conversation with Bridgewood may help, then please don’t hesitate to give us a call for free and impartial advice.
Can I strike off if the company has debts?
No, you must seek professional advice if the company has liabilities and may need to enter into an insolvency process.
Can I strike off instead of liquidation?
The strike off process should only be used if the company is no longer trading and has no liabilities. If the company has any liabilities, then you must seek professional advice from an insolvency practitioner.
What happens to assets and the company bank account after strike off?
You should deal with assets before making an application, so close bank accounts, sell any assets and transfer domains. Any remaining assets after dissolution will pass to the Crown.