What is a compulsory strike off and how do I stop it?

A compulsory strike off occurs when Companies House begins the process of dissolving a company for failing certain obligations, such as filing the annual accounts or the confirmation statement on time.

To prevent this, you must confirm that your company is still active, respond promptly to Companies House, and submit all outstanding documents within the required timeframe.

In this article, we look at the process of compulsory strike off and the consequences for you as a director if your company is struck off the register.

What is a compulsory strike off?

A compulsory strike off is carried out by Companies House when a company has not met its legal obligations to Companies House, such as filing its confirmation statement or submitting its annual accounts.

When a company is struck off the register, it means it is formally closed and can no longer trade.

• Closing a company: Guide to voluntary dissolution and strike off
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• Company dissolution vs. liquidation – what’s the difference?

Compulsory vs voluntary strike off

Voluntary strike off is initiated by an active decision by the directors of a company. They have decided to close the company and remove it from the register.

Compulsory strike off, on the other hand, is forced on the company by Companies House.

Voluntary strike off

If your company is no longer trading and meets the criteria set out by law, you can apply to Companies House to have it dissolved. Following a decision from the board, you’ll need to complete a DS01 form.

Reasons why you might choose to voluntarily strike off your company include:

• You want to retire, and there is no one else to take over
• The company is a subsidiary that is no longer required
• The business concept failed

You must provide a copy of the application for voluntary strike off to every person involved in the business. There are strict timeframes for this, and if the application is not submitted within 7 days, you might incur a fine or even a custodial sentence.

We can help you get this right with our Company Dissolution Service.

What happens during the compulsory strike-off process?

The compulsory strike off process begins with warnings from Companies House and ends with the company being removed from the register.

Here’s a timeline, by way of summary, and we explain each of the steps below:

• Formal letter from Companies House
  • 14 days
• Second letter from Companies House
  • 14 days
• First notice in The Gazette
  • 2 months
• The company is struck off
• Final notice in The Gazette

Step 1: Formal letter from Companies House

You’ll receive initial warnings from Companies House if you fail to submit the confirmation statement or the annual accounts on time. These warnings will be sent to your registered office address, as recorded with Companies House. This may not be the same as your correspondence address, so make sure the registered office address is checked regularly.

The letter will ask you to file the required documents and whether the company is still carrying on business. You have 14 days to respond to this letter. In your response, you can either confirm the company is no longer active or ask Companies House to keep it on the register by filing the overdue documents.

Step 2: Second letter from Companies House

This letter tells you that if Companies House does not receive any communication from you within 14 days, then a notice will be published in The Gazette with a view to striking the company’s name off the register.

Step 3: First notice in The Gazette

If you don’t respond to Companies House, they’ll then publish another notice in The Gazette giving two months’ warning before striking the company off. You’ll have two months to contest the notice, which is essentially your last chance to prevent the compulsory strike off of your company.

Step 4: The company name is struck off the register

If you do not take any action, then Companies House will strike the company’s name off the register.

Step 5: Confirmation notice in The Gazette

Companies House then publishes a Final Notice in The Gazette to inform readers that the company’s name has been struck off the register.

How to stop a compulsory strike off

There are two key steps to preventing a compulsory strike off from going ahead:

Reply to Companies House without delay

You need to act quickly to inform Companies House that the company is still active and trading. Tell them about the steps being taken to rectify any failure to submit the confirmation statement and/or annual accounts. If you need extra time to get your accounts in order, ask Companies House for an extension.

Submit filings

Submit your filings as soon as possible. If the reason for the strike off is that your annual accounts or confirmation statement are late, submit these to Companies House without delay.

Should I let my company be compulsorily struck off?

If the company is coming to an end and you want to close the business, you could have it compulsorily struck off. The company must have:

• No outstanding debts
• Sold its assets and closed its accounts
• Ceased trading

However, it’s not generally recommended. For that reason, it’s safer to voluntarily strike off the company if you’re ready to close the business.

What are the risks of ignoring strike off warnings?

If you ignore the warnings and letters from Companies House, then Companies House will publish a notice in The Gazette. If you then don’t respond to that notice, Companies House will remove your company from the register, and it will cease to exist. In other words, if you ignore the warnings, the compulsory strike off will continue. If you engage with Companies House, you might be able to stop the process.

What are the risks of being struck off by Companies House?

Before you allow your company to be compulsorily struck off, be aware of the risks that arise as a result.

The company ceases to exist

The main consequence of compulsory strike off is that it is no longer able to trade or carry out any of the legal functions of a company.

Company assets revert to the Crown

Any assets of the dissolved company will automatically become the legal property of the Crown. This includes any money in the company’s bank account (which will be frozen).

Reputational damage

Compulsory strike off action becomes a matter of public record because a notice is published in The Gazette. This may have a negative reputational impact on the company and its directors, even if the company is not ultimately dissolved.

Action against the directors

Compulsory strike off may lead to enforcement action being taken against company directors individually, in addition to the company.

Failing to file your annual accounts or confirmation statement is a criminal offence, and directors can be prosecuted and fined personally. In certain circumstances, you may even face disqualification.

Personal liability for debts

If a company that has been struck off continues to trade, shareholders and directors can be held personally liable for any debts incurred in the course of business.

How do I restore a struck-off company?

There are two ways to restore a dissolved company: (1) Administrative restoration, and (2) Restoration by court order.

Administrative restoration

If your company was compulsorily struck off (e.g. you failed to file required filings), and the company was actively trading at the time it was struck off, you can apply to Companies House for administrative restoration.

Restoration by court order

In all other circumstances, or if the deadline for administrative restoration has passed (six years), you’ll need to apply to court for an order to restore the company to the register. You have six years from the date of the company’s dissolution within which to make the application.

Get support with avoiding compulsory strike off

At Quality Company Formations, we offer a range of services to help you avoid compulsory strike-off. Our Full Company Secretary Service keeps you up to date on all your necessary filings. Additionally, our Confirmation Statement Service ensures you never miss a deadline for your confirmation statement. Lastly, if you need to dissolve your company, our company dissolution service manages all the steps required for a voluntary strike-off.