THINKING OF DISSOLVING OR STRIKING OFF A COMPANY? - WATCH THIS FIRST!

Some Directors choose to strike off their ltd company, this is sometimes known as a dissolution or dissolving your ltd company.

I'm going to explain a little bit about it here to make it simple to understand.

Striking off your company is the process of removing your companies details from the companies house register. Once this is successful the company no longer exists.

It's worth stating here that companies can only be dissolved if they don't owe anyone any money or if the company does owe money, it can be paid back before you apply to strike the company off.

When the company has been struck off or dissolved you will lose control of the business bank account, you won't be able to trade on or sell assets. If you do continue to do this you could get in some serious trouble with the authorities such as a fine, being made personally liable for company debts, or even a ban from being a director.

How to do it

It's a very simple process to strike your company off as long as you can meet the following criteria:

- the company has no debts or can pay off its debts in full before you apply to strike it off
- hasn’t traded or sold off any stock in the last 3 months
- hasn’t changed names in the last 3 months
- isn’t threatened with liquidation
- has no agreements with creditors, eg a Company Voluntary Arrangement (CVA)

If your company doesn't meet the above criteria but you would still like to close your business you will be better suited to voluntarily liquidate the company.

To apply to strike the company off you must send companies house a DS01 form. You will receive a letter form them acknowledging that you have filed the form correctly and if nobody objects to the strike off the company will be closed in around 3 months.

Can I strike off a company with debts?

If your company has debts it's better for you to enter into a creditors voluntary liquidation but in certain circumstances, companies house will allow you to close a ltd company with debts.

When companies apply to strike their company off and the company still has debts, it's highly likely that one of the creditors will raise an objection to the strike-off which means the process is canceled until the objection is resolved.
It can sometimes be possible to strike your company off even it has debts which it cannot pay. You can inform all of the creditors of your intention to strike the company off and that the company has no assets or means to pay for the liquidation and invite them, should they wish to pay for the liquidation and appoint an insolvency practitioner. In some cases, your creditors will not waste the money on paying for the companies liquidation especially if the company has no assets and they have no means of recovering any of the money owed.

To strike the company off you send in a completed DS01 form to Companies House, you would also send this form to your creditors before dissolution to notify them of your intentions.

If you don't inform your creditors and the company is struck off the creditors can still apply to restore the company to the register and chase you for the debt. They would then petition to wind the company up and the Directors would have to face an investigation.

Most Directors are paid some income through the PAYE scheme, if you have been paid through the PAYE scheme for over 2 years you may be better off financially as a Director liquidating the company so you can make a claim for redundancy from the Government, the average claim is £9,000, and it is a very straight forward process to assess your claim. You can't make a claim for redundancy if the company is dissolved.

If you have taken a Bounce Back Loan that the company cannot pay back it's highly unlikely that your company will be allowed to be struck off.

Get in touch with me if you have any questions,

Thanks,

Chris

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