Company strike off
If COVID19 has ‘struck you down’, ask us to ‘strike you off’.
As the economy starts to unwind from the COVID19 lockdown and get back to work, realisation is starting to dawn for a number of companies that the business they had four months ago, simply isn’t there anymore.
Faced with the prospect of debts to pay but no income or assets, many directors are calling us asking what their options are. They are limited and not wholly satisfactory. There is the option of doing nothing or ignoring post and hoping that the Company will be compulsorily struck off. One might write to creditors asking them to take action to wind up the company, but this may never happen and the stress of waiting for creditor action, which may never come, can compound matters.
We advise on these options, but also introduce a more positive note, as we’ve developed our own Strike Off Option for those businesses that need to close, but which have no funds to pay for a liquidator.
Most days we get enquiries that fit the unsustainable debt/no assets scenario, and I am able to explain that If the company can’t pay its debts now or can’t arrange terms to pay its debts then it is insolvent. An insolvent company can go into voluntary liquidation but an insolvency practitioner must act as liquidator, and this can be costly, at least £2,800 plus vat. In certain circumstances a company can be struck-off from the register at Companies House, without being liquidated first, but the creditors must not object and the correct procedures must be followed.
To be able to do this the company must ensure it:
- hasn’t traded or sold off any stock in the last three months
- hasn’t changed its name within the last three months
- isn’t threatened with liquidation
- has no agreements with creditors in place, e.g. a Company Voluntary Arrangement (CVA)
There are a number of important procedures concerning HMRC, notification to creditors, shareholders and others, amongst other issues, that must be followed. We make the entire process straightforward and stress free for a Director for as little as £249 plus vat, less than 10% of a formal liquidation.
Where there is HMRC liability we always caution that they may object to the strike off application, but we would hope to be able to speak to the relevant department to get such an objection removed.
If this is ultimately unsuccessful then it is potentially possible to liquidate the Company and for the Director who is also an employee to make a claim for loss of wages and holiday, redundancy and loss of notice, and to use these funds once received to settle the costs of a liquidation.
In short we would always try to ensure that there is some available solution to help a Director close their company in a legal and efficient manner.