What are the benefits of striking off?
Of course it’s not that simple, there’s other rules and stipulations to be met – the most important being that the company has to be solvent with no outstanding debts.
They must also have not traded, changed the company name, sold any assets or rights or started a formal insolvency procedure within the past three months.
If there’s one director of the company then they’re required to sign the form. If there’s two then both are required to sign although if there’s more than a majority have to add their signatures to the document to make it valid.
A £10 fee is payable to Companies House but importantly this must not be settled from the account of the business to be struck off. If it is, then this could technically be classified as trading and a breach of the procedure!
On average it takes around three months to strike off a company. After filing the form, the directors have seven days to inform all other interested parties including directors who didn’t sign the form, shareholders, creditors, employees and trustees of any employee pension funds.
A notice appears in The London Gazette (or Edinburgh or Belfast Gazettes if the company is based in Scotland or Northern Ireland) giving any interested parties the chance to object to the company’s dissolution.
If a valid objection is received then the procedure is suspended pending further investigation.
These objections could be from creditors opposing the strike off because of unpaid debts including HMRC if there is any unpaid VAT or Corporation Tax; evidence of trading emerging; ongoing legal actions against the company or any interested parties who weren’t aware the strike off process was underway. Objections may also come from employees who have not been paid all of their outstanding entitlements (Which are covered by the redundancy payments service in the event of liquidation).
If there’s sufficient reason for Companies House to reject the process they’ll write to the director to inform them or HMRC will write directly themselves if they’re the objecting party.
Once receiving this letter, the director must either comply with the demands or pay any outstanding debts immediately. Again, this has to be done carefully to avoid the company being seen to be trading – potentially undermining the procedure while attempting to meet its requirements.
Alternatively, if they don’t believe there’s a valid reason to deny the striking off then they can formally object.
If a strike off is rejected because of outstanding debts and they can’t be paid off then a Creditors Voluntary Liquidation (CVL) might be the best solution – unless the liquidation is being brought by the creditors. We appreciate that many people revert to strike off because they believe they cannot raise the fees to go down the liquidation route. There are several options available to fund the liquidation, where this is the case, which may allow you to go ahead with this option.
Whether you’re restructuring, retiring, want to try a new challenge or draw a line under a business but can’t strike off because of debts then you should get in touch with us.
After an initial consultation and conversation with one of our team of expert advisors, we’ll be able to give you a plan on how to overcome any obstacles stopping you from striking off or liquidating the business.
We’ll help you navigate the essential stages then you can seize control of your own future once again.