Sometimes a company is no longer required. It may have had a glorious past or it may never have traded. Although in many cases there may be reasons to maintain the company as a dormant company, the directors may instead feel it is as well to close it down. Section 1003 of the Companies Act 2006 gives the directors the right to apply to strike off the company and it’s that process that we look at in this article.
There can be many reasons why someone might wish to strike off their company from the register of companies. Perhaps the company was set up to fulfil an idea or sell a product that didn’t work or is no longer viable. It might be that the owners want to retire and can’t find anyone to take over the company from them. Perhaps it’s a subsidiary that’s no longer needed.
Whatever the reason, so long as certain conditions are met the directors may choose to request to strike off the company using Companies House form DS01. Once struck off, the company legally no longer exists and that fact can be checked by searching against the company name at the Companies House website.
Dissolving a Company?
Inform Direct will make this simple for you by producing the documents required.
All you need to do is sign and send the system created document to Companies House with a cheque for £10 as their fee. It couldn’t be easier.
To use the strike off procedure using the DS01 form, in the last 3 months the company must not have:
- Traded (or otherwise carried on in business)
- Sold any property or rights owned by the business which it previously sold while trading. For example, a clothes shop could not in those 3 months sell remaining clothes themselves, but it could sell the mannequins, tills, shelving and its delivery vehicle.
- Changed its name
- Engaged in any activities other than those required to dissolve the company, conclude its affairs or comply with a legal requirement. This allows a company to have sought (and paid for) professional advice in relation to dissolving the company.
In those cases, the business would have to wait the 3 months before being able to use the strike off procedure and use form DS01 to dissolve the business.
This procedure to strike off a company voluntarily cannot be used where the company is insolvent
This procedure to strike off a company voluntarily cannot be used where the company is insolvent (i.e. cannot pay its debts). In more detail, that means:
- The company must have no outstanding liabilities – so all of its outstanding creditors must have been paid
- There must be no outstanding petition to wind up the company, insolvency proceedings or another type of order under the Insolvency Act
- There cannot be any existing agreements with creditors – e.g. a Company Voluntary Arrangement or other compromise agreement
In these cases, form DS01 is not appropriate and you should instead take professional advice about your obligations as a director from an appropriate professional experienced with handling insolvency situations.
What must a company do before requesting strike off?
Before embarking on the strike off procedure, there’s potentially a lot of things you’ll need to settle. While these will depend on your business, they might include a need to:
- Follow the detailed rules if you’re making staff redundant
- Pay any staff their final wages and salary
- Prepare final accounts and a company tax return and send these to HMRC, stating that these are the final accounts and that the company will be dissolved shortly. (You won’t need to file final accounts with Companies House.)
- Pay HMRC the final balance of Corporation Tax, PAYE, NI and any other tax liabilities
- Ask HMRC to close down the company’s payroll scheme
- Deregister for VAT
- Distribute any business assets between the shareholders. Any assets not distributed are effectively abandoned, bona vacantia, to the Crown as part of voluntary strike off.
- As part of a board meeting, minute that the company has paid or will pay all of its outstanding debts or other obligations
- Close any company bank accounts.
- Transfer website domain names
How do I get a form DS01 to strike off the company?
You can use Inform Direct to create and populate the DS01 form for you. Unfortunately, at present, Companies House only accept this as a paper form and not electronically.
The form should be signed by a majority of the directors. If there are 2 directors both should sign.
What does it cost?
A cheque (or postal order) for £10 and made payable to Companies House must be sent with the completed form DS01. Do not send a cheque from the account of the company applying to be struck off otherwise it will fail the dormancy test.
Where do I send the form DS01 and cheque?
A cheque and the completed form DS01 should be sent to
- Companies House, Crown Way, Cardiff CF14 3UZ – for English and Welsh companies
- Companies House 4th Floor Edinburgh Quay 2, 139 Fountainbridge, Edinburgh EH3 9FF – for Scottish companies
- Companies House 2nd Floor The Linenhall, 32-38 Linenhall Street, Belfast BT2 8BG – for Northern Ireland companies
Who must I tell about the proposal to strike off the company?
Within 7 days of sending form DS01 to Companies House, a copy of the form must also be sent to interested parties. Legally, therefore, a copy should be sent to any person who is:
- A member (usually a shareholder)
- An employee
- A creditor of the company
- Any director who didn’t sign the DS01 form
- The manager or trustee of any pension fund established for employees
Anyone who later, after the form is sent but before the company is dissolved, becomes a member, creditor etc must also be send a copy of the form within 7 days.
If you break these rules, you can be fined and face prosecution. It will also delay the strike off of the company, as parties who should have been informed will have the ability to object to the strike off proceeding (see below).
What happens next?
Companies House will check the DS01 form and, assuming it’s acceptable, send the company acknowledgement in the post.
A notice will then be published in the London, Edinburgh or Belfast Gazette (depending on where the company is based) giving at least 2 months’ notice of the intent to strike off the company. Gazettes are the UK’s official newspapers of record, where you can view both recent and historic strike-off proposal notices.
The Gazette notice invites any interested party to make an objection as to why the company should not be struck off.
Objections to strike off – why and how?
Any interested party can make an objection to the proposal to strike off the company. Objections must be made in writing, sent to the Registrar of Companies alongside any supporting evidence (for example, copies of invoices which demonstrate that the company is still trading).
Valid reasons for objecting
- The company has not complied with the conditions of the application to strike off. For example, it would be valid cause for objection if the company has traded or changed its name during the 3 months before the application to strike off or afterwards.
- The directors have not informed interested parties of the proposed strike off
- One or more of the declarations on form DS01 is false
- The company has wrongfully traded
- The directors have committed tax fraud or another type of offence
- Action is being undertaken, or is pending, to recover money owed from the company. This might, for example, be via a winding-up petition or through the small claims court.
- Legal action of any other kind is being taken against the company.
If an interested party makes an objection which is upheld by the Registrar before the 2 months has expired then the action to close the company will be suspended.
Do I still have to file a confirmation statement and accounts with Companies House after filing the DS01 form?
No. Once, an application to strike off the company is accepted Companies House will no longer chase for these but if the striking off is aborted – see below – then they will become due again.
What can stop the company being struck off?
Before a company is struck off Companies House will check with HMRC.
If HMRC believes that there is or might be some tax due from the company they will object to the dissolution and Companies House will reject the application.
So, before sending in a form DS01 it may be as well to obtain advance clearance from HMRC that no tax is or might be due. If the company has never traded or been dormant for several years then HMRC are most unlikely to challenge an application for striking off and you can safely proceed without seeking prior clearance.
Can the dissolution be stopped by the company?
The directors must halt the dissolution process if any of the events in CA2006 s.1009 occur. So, for example, they must abort the strike off if the company:
- changes its name;
- makes a disposal; or
- engages in any activity other than that required to effect the dissolution.
The directors can choose to halt the strike off process for other reasons. Whether the dissolution is being halted for one of the statutory reasons or another reason then it is form DS02 that needs to be filed. Creation of this populated form is available for free in Inform Direct.
If the application is withdrawn, the £10 fee sent with form DS01 is non-refundable. Note also that any outstanding accounts and confirmation statements (or, before 30 June 2016, annual returns) will be become due again and the accounts will be subject to any late filing penalties.
When will the company be struck off the register?
If there is no reason to do otherwise, the Registrar will strike off the company within about 2 months from the notice in the Gazette. At that point, a second notice will be published in the relevant Gazette and the company will no longer legally exist. If the company is registered with Inform Direct you will be notified when the company is successfully dissolved.
At the date of strike off, any cash or assets held by the dissolved company become the property of the Crown via bona vacantia. For this reason, it’s usually prudent to complete the distribution of the company’s remaining assets before submitting the DS01 form to Companies House.
What company records need to be kept?
Business documents must be retained for 7 years after the company is struck off. That would include, for example, all invoices, receipts and company bank statements.
If the company employed people, you must also retain a copy of its employers’ liability policy and schedule. These must be kept for 40 years from the date of strike off.
Can a company be restored to the company register once it has been struck off?
Usually it can. However, it is not always a simple (or cheap) process and may require a court order. It is probably best to take specialist advice that will be tailored to the particular circumstances.
How soon can I start another company with the same name?
Once the Registrar of Companies has struck off the old company you can form a new company with the same name. The Inform Direct company formation wizard makes this really easy.
Why bother filing a DS01 and paying £10 if Companies House will do it all for you?
In some cases, Companies House will beat the directors to striking off the company. Indeed, if they believe that a company is defunct i.e. no accounts or confirmation statement have been filed and post sent to the company’s registered office goes unanswered then Companies House has the right to remove such a company from the register.
There are at least two potential reasons why it may be advisable to file a DS01 rather than wait for Companies House to dissolve a company:
- The possibility that it could adversely affect the director’s credit score
- If one of the directors subsequently needs professional indemnity insurance the application form may distinguish between an orderly strike off of a previous company and it being dissolved by Companies House for failing to file on time.
Since the cost is only £10 and the process is so simple, most people will choose to file form DS01 and maintain control over the process of striking off the company.
Inform Direct makes it simple to apply to strike off a company from the Companies Register by creating the documentation needed in just a few steps.