When will Companies House not allow you to close your limited company?

Why might your strike-off application be rejected?

Requesting the closure of a limited company through Companies House is the simplest method to conclude your business, but caution is essential. While it is an appealing option, specific criteria must be met before you can remove your business from the Companies House register. Incorrectly closing down a company at Companies House may result in director disqualification and other sanctions.

 

How can I initiate the strike-off procedure?

As a company director, you can utilise a procedure known as company strike-off or dissolution to remove your business from the Companies House register. This approach is suitable for limited companies that can settle all their debts and do not possess substantial assets. Solvent companies with valuable assets (exceeding £25,000) are generally better served by a Members’ Voluntary Liquidation (MVL), a more tax-efficient method of distributing assets to shareholders.

The process for striking off or dissolving a company is relatively straightforward. You can either submit the paper form DS01 and pay a £10 fee or follow the online process for £8. If you adhere to the rules correctly and the business can meet all its outstanding obligations, the company will be struck off the register and cease to exist as a legal entity.

 

When can I close my limited company via strike-off?

Your company must be solvent, without any ongoing legal actions against it, and should not have traded, sold any property, or changed its name in the three months leading up to your strike-off application.

Additionally, you must:

• Submit outstanding statutory returns and accounts
• Settle outstanding tax liabilities
• Conclude the payroll
• Dispose of or transfer company assets
• Close the company’s bank accounts
• Notify creditors of the intended closure

 

Companies House will verify the details of your application. If you fulfil these requirements and encounter no objections to your strike-off, the company is expected to be removed from the register approximately three months after your application.

 

Can Companies House reject my strike-off application?

Companies House may reject your strike-off application for various reasons. You will receive a letter notifying you of their decision, although the letter may come from HMRC if the company has outstanding tax liabilities. The letter will outline the necessary actions for your company to be struck off the register and provide details on the appeal process.

When settling a tax bill before your strike-off application is accepted, it’s crucial to be cautious about how you repay the debt. There is a risk that the company might be perceived as trading, leading to a potential denial of your strike-off application. This is a situation where we can offer guidance and advice.

 

Why might Companies House reject my strike-off application?

Companies House may reject your strike-off application for any of the following reasons:

I. You submit your application incorrectly

It’s common for directors to submit applications with omissions or errors. In such cases, Companies House will request you to resubmit the application with all the necessary information.

II. You have actively traded in the past three months

You can only strike off a non-trading company. Your application must be submitted at least three months after your last trading activity.

III. You have changed the company’s name in the past three months

Your strike-off application will face rejection if you change the company’s name within three months before submission. To resubmit your application, you will need to wait for three months after the name change.

IV. The application is not submitted by a director or the majority of directors

Only a company director can submit a strike-off application. In cases with multiple directors, a majority of those directors must sign the application. If there are no directors, for instance, if the sole director has resigned or passed away, you will need to follow the compulsory strike-off procedure.

V. There’s an ongoing insolvency process

You cannot dissolve a company that is involved in an active insolvency procedure, such as a Company Voluntary Arrangement (CVA). In this situation, you must either close the company through alternative methods, typically a Creditors’ Voluntary Liquidation (CVL), or wait until the insolvency procedure has concluded before applying for strike-off.

 

Who can object to your strike-off application?

In addition to Companies House, other concerned parties can raise objections to your strike-off application. After you’ve submitted your application, Companies House will publish a notice in the Gazette to notify other parties of your intent to dissolve the business. These parties then have two months to raise objections. 

Entities eligible to object include:

• Your creditors
• Parties involved in legal proceedings against the company
• Interested parties not informed of the strike-off application
• Individuals with evidence that the company has changed its name or traded in the last three months

 

Common objections often arise from HMRC due to unpaid tax liabilities and trade creditors pursuing outstanding invoices. The UK Government is also increasingly objecting, particularly concerning unpaid Bounce Back Loans and Coronavirus Business Interruption Loans.

 

What can I do if someone objects to my strike-off application?

If you owe money to a single creditor, you have the option to settle the debt and resubmit your strike-off application. Alternatively, you may resubmit the application without repaying the creditor and hope they do not raise an objection. However, this approach is seldom successful, as it will likely attract the creditor’s attention.

If you have multiple unpaid creditors, you could clear all your debts and then resubmit the application. If only one or two creditors object to your strike-off, exercising caution is crucial when repaying only those creditors and dissolving your company. Such payments may be viewed as preference payments, potentially resulting in personal liability issues or even director disqualification.

If you cannot repay multiple creditors, you’ll need to explore alternative methods to close your limited company. Typically, this involves opting for a Creditors’ Voluntary Liquidation.

In this scenario, you appoint a licensed insolvency practitioner to assume control of the company, liquidate its assets to repay creditors as much as possible, and write off any outstanding debts. Subsequently, the company will be struck off the Companies House register.

Read More:

• What should I do with my company if I am retiring
• How much does it cost to close a company in the UK
• Should I close my company or make it dormant
• What tax do I have to pay when closing my company
• Can I close a company with debts and start again

 

Need advice?

If you’re uncertain about how to close your limited company or concerned about the potential rejection of your strike-off application by Companies House, we are here to assist you. Call our free director helpline at 0121 769 1915 or schedule a free consultation at one of our 100+ nationwide offices.