Striking off is a procedure to end the life of a company. 

At a glance

At a glance

  • Striking off is an alternative procedure to a formal liquidation.
  • A company may be struck off the companies register by the registrar of companies if it not carrying on any business or operation .
  • A company may also voluntarily apply to be struck off the registrar.
  • In order to apply for voluntary striking off 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 any other assets have not been distributed to shareholders, that undistributed property 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. If there are higher assets and capital treatment is desired for tax then liquidation is necessary. 
  • The Targeted Anti-Abuse Rule introduced from 6 April 2016 in order to combat 'phoenixing' (the practice of closing one company and starting a new one immediately) only applies to distributions made on winding up (liquidation) it does not apply on striking off.

Also see our guide Striking off a company: step-by-step

Overview

Striking off procedure
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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 may be by the registrar of companies under section 1000 of the 2006 Companies Act, or
  • Under s1003 a company may apply for striking off.

How to strike off a company
Download 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, the registrar will put a notice in the Companies Gazette to advertise that it has the power to strike off a company and inviting any interested party to show cause as to why this should be done. If no response is made the company is struck off three months later. 

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.

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 striking off even though this is illegal under the Companies Act.

  • From 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 Distributions & striking off for further detail.

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.

Anti-avoidance measures

HMRC has the power to counteract tax advantages connected with Transactions in Securities.

  • From 6 April 2016 a distribution in respect of securities on a winding up falls under the TIS regime.
  • A new Targeted Anti-avoidance Rule (TAAR) also applies when an individual winds up a close company and operates a similar business within two years.

The expanded definition of a TIS and the TAAR should not extend to a distribution on striking off. The £25,000 limit mentioned above applies instead.

 

 

Restoration of a company struck off under s1003 Companies Act 2006/ s652/652A Companies Act 1985

A company which has been struck off can be restored to the Register the process depends on the manner in which it was struck off.

If the company was struck off by the registrar the process is dealt with by post and is reasonably simple, where a company was voluntarily struck off court action is required to reinstate the company and there is as a result a long-winded and expensive process.

See When can a company be reinstated?

Updates

2 November 2016: extra links added and minor wording changes to reflect the fact the TIS rules relate to distributions on a winding up, not a strike off.

12 April 2016: note updated for 6 April 2016 anti-avoidance the Transactions in Securities measures.