Kevin McLeod
Written By Kevin McLeod
Licensed Insolvency Practitioner
November 13th, 2023

When a limited company faces dissolution, its removal from the Companies House register signals more than just the end of its business operations. This process, known as ‘striking off,’ requires directors to ensure all creditors are paid within 12 months of closure, reflecting the company’s solvency and eligibility for dissolution. The importance of this step cannot be overstated, as insolvent companies are not eligible for this process.

In cases where a company fails to settle its debts within the stipulated timeframe or is later discovered to have been insolvent at the time of dissolution, it may be reinstated on the register. This scenario also raises concerns about the directors’ declaration of solvency, specifically whether they intentionally avoided their financial responsibilities to creditors.

If objections to the strike-off are validated, the company can be re-registered, effectively negating the dissolution.

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What Does Company Strike off Mean?

Striking Off is the correct term for applying to have a company removed from the register at Companies House. Before making a strike-off application, directors must close down the company legally.

This formal process involves announcing plans to interested parties, such as shareholders and creditors as well as to HMRC. Once the strike-off application has been completed, a copy must be sent to shareholders, creditors, employees, etc, within seven days to avoid a penalty and possible prosecution.

Who can Object to Company Dissolution?

Anyone with a legitimate interest in the company can object to its dissolution, including:

  • Creditors: Creditors are the most common objectors, as they may lose out on money if the company is dissolved before they are paid.
  • Employees: Employees may object if the company has unpaid wages or redundancy payments owing to them.
  • Shareholders: Shareholders, especially minority shareholders, may object if they believe the dissolution is being used to disadvantage them financially or to sidestep their rights.
  • HM Revenue and Customs (HMRC): HMRC may object if the company has unpaid taxes or if they suspect tax evasion or avoidance.

How are Objections Made?

Objections to a company’s strike-off can be submitted either by email or through postal mail to the Registrar of Companies at Companies House. This action effectively puts the company’s dissolution application on hold while the objection is investigated, typically for a period ranging from three to six months.

It’s particularly important for directors to be aware that creditors who are owed money have the right to object to the company’s dissolution even after the company has been removed from the Companies House register. For their objection to be considered valid, they must be able to furnish proof of the existing debt. This provision underscores the necessity for companies to ensure all financial obligations are settled before proceeding with dissolution, as unresolved debts can lead to complications even post-dissolution.

Why would HMRC Object to a Company Strike Off Application?

HMRC is entitled to object to a company strike-off application if the company has outstanding tax liabilities. HMRC will object to prevent the company from being dissolved before it has paid its taxes.

Companies House publishes the details of all companies that have filed a strike-off application in The Gazette to alert creditors to companies that will be struck off three months after the date of the notice. This means that even if HMRC is not notified of the strike-off application, it is still likely to find out about it and object

Notice of Striking off Action Suspended

Once alerted, HMRC will send a warning letter to directors, notifying them that it has raised an objection to the strike-off application. Therefore, striking off a company is only feasible when a company is up to date with its corporation tax arrears or VAT obligations.

HMRC Objection

When a Struck off Company Owes Money, How far will HMRC go to Recoup the Debt?

How far HMRC is willing to go to pursue payment depends on how much is owed by the company, whether the taxman can prove that the money is owed to the company by other parties, such as the directors, and whether the collection of the debt would result in HMRC being paid from the funds.

If the amount owed by the company is a small amount, the taxman is highly likely just to write it off.

What to do if you Receive an Objection from HMRC

Once directors receive a letter from HMRC, notifying the company that it is objecting to the strike-off, they need to pay the tax arrears immediately. If there is a disagreement regarding the amount of tax owed, directors should contact HMRC immediately to discuss this further.

However, directors who intend to settle their tax bill should be cautious with the funds they use as the company may be deemed to be trading and then a strike-off application would be denied. One of the requirements of the process is that the company is inactive for a certain period of time before it is removed from the Register.

What happens if the objections are upheld?

If objections to a company’s strike-off are upheld, the following consequences may occur:

  • Suspension of the strike-off process: The company will remain active and listed on the Companies House register.
  • Resolution of outstanding issues: The company will be expected to resolve the issues that led to the objection, such as paying off debts, addressing legal compliance matters, or resolving disputes with creditors or other objectors.
  • Legal consequences for directors: If the objection involves matters such as fraudulent behavior, tax evasion, or misrepresentation of the company’s solvency, directors may face legal consequences, including financial penalties or disqualification from serving as a director.
  • Restoration to the register: If the company has already been struck off but the objection is later upheld, the company can be restored to the register. This means that the strike-off will be reversed.
  • Further investigations: The objection being upheld may trigger further investigations into the company’s affairs, particularly if there are suspicions of misconduct.
  • Reevaluation of company’s status: The company will need to reevaluate its status and operations. If it was winding down operations in anticipation of the strike-off, it may need to resume or restructure its activities.