Being struck off the Companies House register or having a company dissolved are situations all UK business owners dread. However, they are relatively common occurrences and do not necessarily spell the end for a company. Here, we explain the ins and outs of company strike off, dissolution and restoration in the UK.
What is meant by strike off and dissolution?
A company can be struck off the register at Companies House if it fails to file required documents, such as annual accounts and confirmation statements. This effectively removes the company from the register and means it cannot legally operate.
Dissolution takes this a step further – a company is dissolved when its assets are distributed, and it ceases to exist altogether. This usually happens following insolvency or if a company applies for voluntary dissolution. Once dissolved, a company cannot be restored.
Why might a company be struck off?
There are several reasons a UK company may find itself struck off by Companies House:
- Failing to file annual accounts, confirmation statements or other required paperwork on time. This is by far the most common reason for involuntary strike off.
- Failing to comply with statutory notices issued by Companies House. For example, notices to change a company’s registered office address.
- Failing to respond to Companies House investigations into the company’s activities.
- Suspected inactivity by the company over a prolonged period.
- The company directors requesting voluntary strike off.
The result is the same – the company is removed from the register and prevented from operating legally.
What does strike off mean in practice?
Once struck off, a company loses its legal status and protections. It cannot enter into contracts, own assets, take legal action or do any form of business.
In effect, the company is inoperable until it takes steps to have itself restored to the register. HMRC may also seek to recover any tax owed once a company is struck off.
Directors can also face disqualification if their company is subject to compulsory strike off, especially if there is evidence of misconduct.
Seeking voluntary dissolution
Some companies request their own voluntary strike off or dissolution, often because the business has ceased trading or become dormant. But there are risks here too.
Before applying, directors must legally declare the company can meet all its liabilities. If debts emerge after dissolution, directors can be held personally liable.
The company must cease all business activity during the dissolution process. And once dissolved, a company cannot be restored, so this decision is permanent.
Having a company struck off or dissolved is therefore clearly something all directors will wish to avoid. But if it does happen, restoration may be possible with prompt action.
Restoring a struck off company
Within six years of being struck off, a UK company can apply to Companies House for administrative restoration. This involves filing any overdue paperwork and paying a restoration fee.
If approved, the company is put back on the register as if it had never been removed. Business can resume as normal.
After six years, an application must be made to court to restore a struck off company. This is more complex and expensive, requiring evidence the company is back on a sound financial footing.
But restoration remains possible in most cases unless the company has already been formally dissolved. Taking expert legal advice is essential for companies seeking restoration after many years.
Avoiding compulsory strike off
Naturally, prevention is better than cure when it comes to company strike off. Keeping filings up to date, monitoring Companies House correspondence and staying legally compliant are key.
Seeking professional advice on dormancy or voluntary dissolution can also avoid hasty, risky decisions. And acting quickly if a company is struck off means the best chance of successful restoration.
While being struck off or dissolved may feel like the end of the road, UK companies do have options. Understanding the law around strike off, dissolution and restoration is essential for all business owners should they ever face this situation.
Contact Future Strategy today to learn how we can help you dissolve your company in a compliant and professional manner.