If you want to close your company and it has no debts or any other financial or legal obligations hanging over it, you can apply to Companies House to strike it off the register.

If you want to close your company and it has no debts or any other financial or legal obligations hanging over it, you can apply to Companies House to strike it off the register.

But what is the best way to go about it and how long does it take?

The main reasons why directors want to close a limited company

Striking off or dissolving your company can be a very tax-efficient way to extract any cash and assets left in the business. If you use a Members’ Voluntary Liquidation (MVL), a form of strike off, the tax applied to capital (cash) take from your company is treated as a capital distribution.

This is important because the distribution of the company’s capital in this way means that, in general, directors pay a lot less tax than if it was a normal income distribution. There is also a possibility that you and your fellow directors could take advantage of Capital Gains Tax Entrepreneur’s Relief – Entrepreneur’s Relief is taxed at just 10% up to £10m worth of lifetime gains.

Maple Accounting note – every company strike off is different. Before making a decision to dissolve your business, please contact your Maple Accounting representative for advice on the most tax-efficient method of strike off.

Three of the other main reasons that directors approach Maple Accounting for assistance in striking off their companies are:

  • A company may be set up as a vehicle for a future project and that future project never materialises, or it is not profitable enough to warrant the time and energy spent on it.
  • There may be conflict between directors and shareholder who wish to go their own way.
  • A reorganisation of a group of companies and, under the new structure, a limited company within that group is no longer needed

What conditions need to be satisfied before striking off or dissolution?

The conditions you need to satisfy before a strike off are that:

  • The business has not traded or engaged in any form of stock sale in the last 3 months
  • The company has not changed its name at Companies House in the last three months
  • Any activities the business has carried out within the previous three months have been to meet the legal obligations required for dissolution, to wind up its affairs, or to comply with a legal requirement or obligation for which it is responsible.
  • No-one is threatening your business with liquidation
  • No-one is threatening legal action against your company
  • Your business has no ongoing agreements with its creditors like a Company Voluntary Liquidation arrangement

At the point of strike off, your company must have no outstanding liabilities. In other words, you can not dissolve your business if it is insolvent and it can’t pay its debts.

Directors can be held personally responsible for any debts incurred or owed by the company if they strike their company off without settling all remaining debts. Sometimes, a creditor will apply to Companies House to have a dissolved company restored to the Register and then petition for its wind-up at which point the directors may come under investigation. If the creditor concerned is HMRC, they may apply fines and penalties back to the point at which tax arrears began to accrue, and they may also choose to investigate a director for fraud.

The form you need to complete to strike off your company is Form DS01, available at the government’s website. It costs £10 to dissolve your company, but the company you intend to dissolve cannot make that payment.

Do I need to keep any records after striking off or dissolution?

HMRC advises that you must keep business documents for a period of up to seven years after dissolution, including receipts, invoices, and bank statements.

You must also keep your employers’ liability insurance policies and schedules for 40 years after strike-off.

What happens to any assets of the company still remaining after striking off or dissolution?

They will return to the Crown under a process called “bona vacantia”. Your bank will freeze all of your accounts and pass on any remaining monies to the Crown.

Who needs to be informed about a strike off or dissolution?

You must let the following people and organisations know within a week of applying for strike off by writing to either their last known address or their registered/principal office address:

  • The company’s members and shareholders
  • Who your company owes or may owe money to – suppliers, ex-staff if you owe them money, landlords/tenants, banks, supplier, guarantors, HMRC, DWP, and anyone taking your company to court over a personal injury claim
  • Your staff
  • The trustees or managers of any pension fund for employees
  • Directors who have not signed form DS01

Failure to inform these people or organisations could lead to a fine or a custodial sentence.

How long does the process of striking off or dissolution take?

The process of striking off or dissolution takes around 3 months. Upon receipt of form DS01, Companies House puts it on a company’s public record and sends acknowledgement of the DS01 form to the address shown on the form and to its registered office.

A strike off notice is then placed in the Gazette – the United Kingdom’s official newspaper. There are separate Gazettes for England and Wales, Scotland, and Northern Ireland. The edition the notice will appear in depends on the country in which the company was formed.

Can a strike off or dissolution be stopped by someone else?

When a notice for company strike off or dissolution is placed in the Gazette, any person or organisation objecting to it has until two weeks before the expiry date of the notice of dissolution to object.

The main reasons for objection are:

  • The company has carried out some activity forbidden to it under the strike off procedure
  • Someone is chasing money from the company
  • An interested party was not informed about the strike off
  • There are untrue declarations on the DS01 form
  • Any form of legal action is being taken against the company
  • The directors are accused of wrongful trading
  • A public sector body believes the directors have committed an offence (for example, tax fraud).

Can I change my mind about striking off or dissolving my company?

Yes, with Form DS02. Please be aware that you are legally obliged to use DS02 to withdraw the application for strike off if you conduct any activities which are forbidden by companies undergoing the strike off process.

Tax-efficient, procedurally-sound company strike off and dissolution

For assistance in striking off or dissolving your company to minimise any related tax liabilities, please contact us by emailing success@maple.uk.com or call 01332 207 336