Is striking off my limited company the right way to close it?

What does striking off a company actually mean?

Striking off is the formal name for removing a limited company from the register at Companies House. GOV.UK's guide to striking off your limited company says you can close down your limited company by getting it struck off the Companies Register, and that this is also known as dissolving your company. Once the process is complete, the company no longer exists as a legal person.

When the directors apply for it themselves, it is called voluntary strike off. Companies House can also start the process on its own, for example when it has reasonable cause to believe a company is no longer carrying on business. That is a different route, and our post on overdue accounts and confirmation statements explains how it can arise.

For a company that can pay its bills and has simply come to the end of its useful life, strike off is often the sensible choice. GOV.UK's page on closing a limited company says the way you close a company depends on whether it can pay its bills or not, and that striking off is usually the cheapest way to close it. Companies House's examples are ordinary ones, such as directors who want to retire with nobody to take over.

Can any company apply to be struck off?

No. There are conditions. The GOV.UK overview says you can only strike off a company if it has not traded or sold off any stock in the last 3 months, has not changed its name in the last 3 months, is not threatened with liquidation and has no agreements with creditors, such as a Company Voluntary Arrangement. If the company does not meet those conditions, the guide says you will have to voluntarily liquidate it instead.

Companies House's guidance on striking off or dissolving a limited company adds detail. In the 3 months before applying, the company should only have done what is needed to decide on and apply for strike off, to conclude its affairs, such as settling trading or business debts, or to meet a statutory requirement. It also says you cannot apply while the company is the subject of insolvency proceedings, including where a petition has been presented but not yet dealt with.

The guidance says it is an offence to apply for strike off if the company is not eligible, and that you could receive a fine.

What has to happen before you apply?

The company has to be closed down properly first. GOV.UK's page on closing down your company describes three strands: telling interested parties and HMRC, treating employees according to the rules, and dealing with the company's assets and accounts.

For staff, that means following the redundancy rules, paying final wages and settling PAYE and National Insurance, which includes telling HMRC the company has stopped employing people. Companies House adds that if you stop trading, you must cancel the VAT registration.

The company must also send final statutory accounts and a Company Tax Return to HMRC and pay all Corporation Tax and any other outstanding tax. Settle anything unfinished with HMRC first, including any refund, because Companies House says HMRC cannot process or issue refunds to a dissolved company. The tax treatment of anything taken out of the company is a question for your accountant.

The application itself is short. GOV.UK's page on applying to strike off says you send Companies House form DS01, signed by a majority of the directors, and gives the fee as £18. The work is in what surrounds it. Within 7 days, a copy has to go to everyone who could be affected, and Companies House lists them widely: members, creditors such as banks and suppliers, landlords or tenants, guarantors, HMRC and the Department for Work and Pensions, employees, pension fund managers or trustees and any director who did not sign. Keep proof of delivery or posting for every copy, and keep the business records for 7 years after the company is struck off, as GOV.UK advises.

Why is strike off not a way around company debts?

Some directors see strike off as a quiet, low cost way to close a company that still owes money and move on. Companies House is clear that it is not a way around them.

Companies House says plainly that voluntary strike off is not an alternative to formal insolvency proceedings. It adds that even after a company is struck off and dissolved, creditors and others could apply for it to be restored to the register. Every creditor has to be sent a copy of the application, and Companies House says failing to notify the relevant parties is an offence.

The director's own position matters too. GOV.UK's closing page says that when a company is insolvent, the interests of its creditors legally come before those of the directors or shareholders. Our post on director duties when a company is struggling sets out what that means in general terms.

So strike off does not make unpaid debts go away. A creditor can object while the application is pending, and even after dissolution a creditor can apply to have the company restored. If the company owes money it cannot pay, the first conversation should be with a licensed insolvency practitioner, not with Companies House.

How can creditors object?

Once Companies House accepts the application, it publishes a notice of the proposed strike off in the Gazette, the official public record. The guidance says that if there is no reason to delay, the registrar will strike off the company not less than 2 months after that notice.

That window is when objections come in. Companies House says any interested party can object once the first notice is published. The notice gives the date the company is due to be struck off, usually within 2 months but in some cases within 28 days, and an objection has to arrive at least 2 weeks before that date. HMRC is on the guidance's list of creditors who must be sent a copy of the application.

Objection is not the only check. If the company has already been struck off, a creditor can apply for a court order to restore it in certain circumstances, and Companies House gives the example of a company that owed the creditor money when it was dissolved.

What happens to money or assets left in the company?

They do not come back to the directors or shareholders. Companies House explains that from the date of dissolution, any assets of a dissolved company pass to the Crown, and that these ownerless assets are known as bona vacantia, which means vacant goods. The company bank account is frozen, and any money in it passes to the Crown as well.

The GOV.UK guide adds that this includes later payments such as refunds from HMRC, and that getting anything back means restoring the company. So deal with every asset before applying: close the bank accounts, transfer things like domain names and share what is left among the shareholders, with your accountant's input on the tax.

How does strike off compare with the other routes?

The right route depends mainly on whether the company can pay what it owes. GOV.UK's liquidation guide describes the two voluntary forms of liquidation.

Route	When it usually fits	Sensible next step
Voluntary strike off	The company can pay its bills, has not traded in the last 3 months and is not threatened with liquidation	The directors close it down properly and apply to Companies House
Members' voluntary liquidation	The company can pay its debts but you want to close it	Speak to a licensed insolvency practitioner and your accountant
Creditors' voluntary liquidation	The company cannot pay its debts and you involve your creditors	Speak to a licensed insolvency practitioner
Keeping the company dormant	The company is no longer trading but you are not ready to close it	Keep filing annual accounts and the confirmation statement

Dormancy is worth a moment's thought. GOV.UK says you do not have to close a company that is no longer trading, but it still has to send annual accounts and a confirmation statement to Companies House while it stays on the register.

When is strike off not the answer?

If the company owes money it cannot pay, strike off is the wrong starting point. Speak to a licensed insolvency practitioner about the company's position before doing anything else. GOV.UK's closing page says you can get professional advice from a solicitor or insolvency practitioner if you are not sure which option suits your company.

If there are substantial assets or retained profits to distribute, speak to your accountant about the tax before choosing a route.

If there is a dispute, a claim against the company or a personal guarantee behind any of its debts, speak to a solicitor first. Our post on personal guarantees explains why a guarantee is a separate conversation from the company's own debts.

Vanquish Capital is not an insolvency practitioner, a solicitor or an accountant, and we will tell you when you need one. If the company is solvent, has stopped trading and has nothing left to sort out, a careful strike off done in the right order may be all it takes.

Where can you talk this through?

Most of the risk sits in the order of things: people, creditors, tax, assets and only then the form.

If you would like a calm, confidential look at whether the company is ready to close, you can book a confidential consultation. We can help you list what needs settling, plan the steps in order and prepare for conversations with your accountant or an insolvency practitioner where needed. You can read more about our director strategy work.