Nov 30, 2018
One closes down a company when the deficits outweigh the benefits. It’s not making money and it’s costing money to maintain. The business didn’t take off, you’ve got a new job and now the yearly government filings are starting to get annoying.
You lay off staff, sell off assets, pay outstanding debts and close down the bank account. What’s next?
Next is the formal ‘striking off’ of the company from the Companies House Register. This is also called ‘dissolution’, as the company is being ‘dissolved’.
Before that happens, you have to abide by the law. This requires that:
– You announce your intention to creditors and Her Majesty’s Revenue and Customs (HMRC);
– You make your employees redundant;
– You deal with business assets and finances.
You then file an application to strike off and send a copy of it within 7 days to any unaware bodies or persons who could be significantly affected:
– Pension fund managers.
The idea is that you don’t act carelessly or in a criminal manner i.e. evade your responsibilities, otherwise you can face a fine and possible prosecution.
You complete and send to Companies House form DS01, which must be signed by a majority of the company’s directors. Our staff can do that for you.
It costs £10 GBP to strike off a company, which is paid using a cheque drawn on an account that does not belong to the company you’re striking off!
With employees you give them their final salary/wage, pay outstanding National Insurance and PAYE and then inform HMRC you’ve stopped employing them.
Business assets are to be shared among the shareholders before the company is struck off. After striking off the Crown gets ‘bona vacantia’ any monies or assets still legally attached to the company. To get those assets back, you might need to ‘restore’ the company legally.
You then send final statutory accounts and a Company Tax Return to HMRC. You pay any outstanding taxes.
You must keep business documents like bank statements, invoices and receipts for seven years after the company is dissolved. You must also keep copies of the company’s employers’ liability insurance policy and schedule for forty years from the date the company was dissolved, if you had employees.
It is criminal offence to make a fraudulent application; you may be fined and prosecuted.
Companies House will then write you a letter to let you know if you’ve completed the application to their satisfaction. If so, the strike-off request will be published in your local ‘Gazette’.
If nobody objects to the strike-off (like HMRC), the company will be struck off the register after 2 months. Then another notice be published in the Gazette which will announce that your company has been dissolved.
Please note: Striking off is not an alternative to insolvency proceedings. A struck-off company can be restored by creditors or HMRC, so they can attach its assets.
The following circumstances disqualify a company from striking off, if they have occurred in the past 3 months (i.e. your company has to be totally dormant for 3 months):
– It has traded;
– It has changed its name;
– It has engaged in any other activity except that which is necessary for the purpose of closing down the company (e.g. seeking professional help in shutting down the company);
– It is involved in insolvency proceedings;
– It has bearer shares in issue.
It’s a legal offence if you contravene these restrictions.
For the small businessman: a solvent company (one which has no debts), and which has no assets, can be easily struck off.
Once a company has been struck off, it can’t make payments, trade, sell assets, or engage in any other business activities. Its listing at Companies House shows as ‘dissolved’.