Nichola Ross Martin's Tax Consultancy

At a glance

• Striking off is an informal alternative to liquidation.
• The process is actioned by the company's directors.
• The company must be solvent.
• The directors can be held to be personally accountable if the company is struck off without settling all its debts.
• Once struck off a company can be restored to the Companies Register within certain time limits.
• If a company is struck off when its share capital or non-distributable reserves or if any other assets have not been distributed to shareholders, they will become property of the Crown, by virtue of Bona Vacantia.
• From 1 March 2012 the maximum amount of a company's assets that can distributed as capital on striking off is capped at £25,000. This includes share capital, see ESC C16. The alternative is to use a different proceedure - liquidation.

Overview & FAQs

Striking off procedure
"Striking off” is not the same as “winding up”. Winding up refers to liquidation, a process conducted by a liquidator to wind up a solvent or insolvent company.

Striking off is a process performed in accordance with section 1003 of the 2006 Companies Act (previously under section 652A of the 1985 Companies Act).

How to strike off a company
Downloan form DS01 from the Companies House website. The directors should meet and make a board minute to confirm that:

• The company is solvent, and has paid or will pay all its outstanding debts or obligations.
• It will remain solvent for the foreseeable future.
• This amounts to a declaration of solvency, but a formal solvency statement is not required to be filed with Companies House.

The form is then completed and its declaration signed and sent off. If all is in order, in three months the company is struck off the Register.

If the company is insolvent, or becomes insolvent, its directors can be held personally accountable to its creditors. Once struck off, a company can be reinstated to the Register; this can happen at any time within the following 20 years. It is rare for this to happen because it is expensive to do.

The Registrar will not strike off a company which has outstanding debts or obligations to HMRC. ESC C16 creates a procedure for the directors to follow and it ensures that HMRC safeguards its position as a potential creditor of the company. It is advisable to apply for ESC C16 before you start to strike off a company.

If the company has non-distributable capital reserves it will need to perform a capital reduction in order to distribute them before you strike it off. Otherwise they will become ownerless goods, or Bona Vacantia which means that ownership passes to the Crown.

The Treasury Solicitor announced in November 2011 that by concession it will not claim share capital under Bona Vacantia. This may therefore be distributed on stiking off even though this is illegal under the Companies Act.

Top-tip: if the company has complications, which mean there is uncertainty surrounding its solvency, the directors should not sign form DS01. They will need to appoint a liquidator to wind up the company instead, see Practical Tax Guide: Insolvency FAQs for directors.

A company which has been struck off can be restored to the Register at anytime before:

• 1st October 2015 (6 years after the commencement of the 2006 Companies Act) or
• 20 years from the date of publication in the London Gazette.
  Whichever occurs first.