What is Company Strike Off?

What is the process to strike off a limited company?

If you no longer need a limited company, Company Strike Off, also known as Dissolution, is a simple and inexpensive way to close it down. You can apply to Companies House to strike the business off the official register of companies. Once it has been struck off, it will cease to exist as a legal entity. However, Company Strike Off is not appropriate for every business. If your company has debts or significant retained profits, other closure methods will be more suitable.

What does striking off a company mean?

There are several reasons why you might want to close a limited company. You could be ready to retire or want to move on to a new challenge, or the company may never have traded and now you’re ready to close it down. Whatever the reason, Company Strike Off allows you to bring an end to the company by following a simple online process and paying a small filing fee. You can also complete the paper form DS01 if you cannot apply online.

You can strike off or dissolve your limited company if it:

• Has not traded or carried out any other activities in the last three months
• Has not changed its name in the last three months
• Is solvent and can repay all its debts
• Has no ongoing legal agreements with creditors and no outstanding legal action against it

If your company meets the criteria, you can apply to Companies House to start the process. As long as all the information you provide is correct, a notice will be placed in the Edinburgh Gazette (for companies incorporated in Scotland) to inform interested parties of your intention to dissolve the company. If there are no objections within two months, a second Gazette notice will be published and the company will be struck off.  

Is strike off the most cost-effective way to close a limited company?

Although Company Strike Off is inexpensive, it may not be the most cost-effective way to close your company. If your company is asset-rich or has substantial cash reserves, a Members’ Voluntary Liquidation (MVL) may be more cost-effective.

The main advantage of an MVL is that the profits you extract from the company are subject to capital gains tax rather than income tax or dividends tax. If you’re also eligible for Business Asset Disposal Relief, you’ll pay just 10% tax on qualifying assets.

What is compulsory strike off?

As well as voluntary strike off - when a company director chooses to dissolve their company - Companies House can also forcibly dissolve a limited company. Known as compulsory strike off, it most commonly occurs when companies do not comply with Companies House regulations. That could be by repeatedly failing to file the company’s annual accounts or failing to notify Companies House of a change in address. Companies House must have grounds to believe the company has ceased trading before initiating the process.

The consequences of compulsory strike off can be serious. Contracts with suppliers and customers will be at risk and the company will find it very difficult to secure funding to resolve the situation as, legally speaking, the company no longer exists. Any assets you have not transferred away from the company before it is struck off will also become the property of the crown.  

Need advice?

Are you unsure whether Company Strike Off is the right way to close your limited company or perhaps you have debts you’re struggling to repay? Contact our business debt advisers to arrange a free, no-obligation consultation. We’ll discuss the company closure methods available to you and guide you on the most suitable approach to take.