Striking off is an alternative procedure to a formal liquidation, however, a company must be solvent and the maximum amount of a company's assets that can distributed as capital on striking off is capped at £25,000 (including share capital). If assets are higher than £25k then liquidation is necessary. If the company is not solvent the directors can be held personally accountable for the company's debts.
Before a company can be struck off, the following should be completed:
- There are detailed rules you need to follow if you are making staff redundant
- Pay any staff their final wages and salary
- Prepare final accounts and a company tax return and send these to HMRC, stating that these are the final accounts and that the company will be dissolved shortly. (You won’t need to file final accounts with Companies House.)
- Pay HMRC the final balance of Corporation Tax, PAYE, NI and any other tax liabilities
- Ask HMRC to close down the company’s payroll scheme
- Deregister for VAT
- Distribute any business assets between the shareholders. Any assets not distributed are effectively abandoned, bona vacantia, to the Crown as part of voluntary strike off.
- As part of a board meeting, minute that the company has paid or will pay all of its outstanding debts or other obligations
- Close any company bank accounts.
- Transfer website domain names
The DS01 form can then be filed. Within 7 days of sending form DS01 to Companies House, a copy of the form must also be sent to interested parties. Legally, therefore, a copy should be sent to any person who is:
- A member (usually a shareholder)
- An employee
- A creditor of the company
- Any director who didn’t sign the DS01 form
- The manager or trustee of any pension fund established for employees
- (Anyone who later, after the form is sent but before the company is dissolved, becomes a member, creditor etc must also be send a copy of the form within 7 days)
Companies House will check the DS01 form and, assuming it’s acceptable, send the company acknowledgement in the post. A notice will then be published in the London Gazette giving at least 2 months’ notice of the intent to strike off the company. The Gazette notice invites any interested party to make an objection as to why the company should not be struck off. If there is no reason to do otherwise, the Registrar will strike off the company within about 2 months from the notice in the Gazette. At that point, a second notice will be published in the relevant Gazette and the company will no longer legally exist.
At the date of strike off, any cash or assets held by the dissolved company become the property of the Crown via bona vacantia. For this reason, it’s usually prudent to complete the distribution of the company’s remaining assets before submitting the DS01 form to Companies House.
Business documents must be retained for 7 years after the company is struck off. That would include, for example, all invoices, receipts and company bank statements.