Striking Off (Dissolving a Business)
What is Striking Off?
Striking off is a term commonly used for the dissolution of a business. This is when a company chooses to close, and applies to be removed from the Companies House register. Upon being ‘struck off’ from the Companies House Register, the business no longer exists.
Striking off can be a simple and cost-effective way to close down a company that has little or no assets. Company dissolution allows its directors to retain full control of the business throughout the process. Furthermore, there is no requirement to hold a formal creditors’ meeting.
What would lead a company to be struck off?
There are many reasons why a limited company might be removed from the Companies House register. One of the most common reasons for business dissolution is the retirement of a director. This usually occurs when company director may want to retire with no clear successor.
A lack of profitability is another common occurrence; it may simply be that a limited company is not making enough money. If there is insufficient profitability to develop or grow a business, then striking off could be a sensible option.
Other frequent reasons for striking off include the directors wanting to pursue a new challenge, or simply that the idea never gets off the ground.
What does striking off actually mean for a business?
As previously mentioned, when struck off and dissolved, the business will be removed from the Companies House register. This means the company cannot trade in any means.
Furthermore, this means the company cannot be involved in any other business activities, such as selling assets or making payments.
Any cash or assets not distributed before the dissolution of the company will be transferred to the Crown. To get these returned, the company may need to be restored.
What happens to debts once a business has been struck off?
You may receive an Object to Company Strike off by the government if your debt are owed to HMRC. You will not be able to complete the strike off procedure until this has been resolved, and the debt is subsequently paid.
When a company is insolvent, it is more likely to enter a formal Insolvency solution such as Liquidation, rather than simply be “struck off” the register.
Should a struck off company have legally provable debts, creditors can apply to Court to have the company restored to Companies House. After this, the creditor can petition to have the company “wound up”.
If you feel your company might benefit from striking off, get in touch today for free impartial advice.