When you’re weighing up the different options for closing your company, a Company Strike-Off can seem like the simplest method. But there are instances where it may be suspended, especially if you leave behind outstanding obligations. When objections are raised by creditors, HMRC or other interested parties, the process can suddenly become more complex and harder to resolve.
What is a Company Strike-Off?
A Company Strike-Off, or dissolution, is a process where a company is voluntarily removed from the Companies House register. It’s a way of closing that’s often considered by solvent companies that have ceased trading and have no remaining liabilities.
However, if the correct procedures are not followed, creditors or other stakeholders are able to raise objections. If this happens, Companies House will suspend the strike-off process until the concerns are addressed.
Common reasons why a Company Strike-Off may be suspended
- Outstanding debts to creditors
If a company has outstanding liabilities, its creditors can object to its removal from the register. This is because dissolving the company without addressing these debts removes their ability to recover what they are owed. - HMRC objections
Unpaid tax liabilities, including VAT, corporation tax or PAYE, can lead HMRC to challenge the strike-off. In some cases, this may result in the company being reinstated to recover unpaid amounts. - Legal proceedings or ongoing disputes
If the company is involved in any legal disputes, the strike-off may be suspended until the issues are resolved. These could include contractual disputes, employment claims or other outstanding obligations that require attention before the company can be removed from the register. - Failure to meet statutory requirements
Companies House may refuse a strike-off application if statutory filings, such as annual accounts or confirmation statements, are outstanding. Ensuring that all necessary documentation is up to date before applying for a strike-off can help prevent delays. - Objections from former employees
If employees believe they are owed unpaid wages, redundancy payments or other entitlements, they may object to the strike-off. Addressing any employee-related liabilities in advance gives you a much smoother process.
The risks of a suspended strike-off
If a strike-off is suspended, it can create uncertainty for directors and leave the company in limbo. During this time:
- The company remains active, meaning directors are still responsible for its affairs.
- Creditors or HMRC may take further legal action against the company.
- Directors could face personal liability if financial matters have not been properly handled.
Taking the time to make sure all the company’s obligations are settled before applying for a strike-off can help avoid these complications.
Alternative options for closing your company
For company directors looking for a structured approach to closing a solvent company, there are other options to consider.
Getting a professional to guide you through the Company Strike-Off process will give you the peace of mind that all financial and legal matters are settled before closure.
If your company is cash-rich, with retained profits over £25,000, using a Members’ Voluntary Liquidation could be the most tax-efficient way to close. It will also provide added reassurance and prevent potential objections to the company’s closure
Seeking professional advice can help you understand your options and ensure everything is handled properly. Get in touch today to discuss your situation and take the right steps towards a successful company closure.
