How to Strike Off or Dissolve a Limited Company
Striking off, or dissolving, removes a company’s name from the Companies House register and ends its legal existence. Directors must stop trading immediately once dissolution completes.
by Mark Hollinshead Experienced Managing Director leading financial services with strategic vision, regulatory expertise, client focus, and proven growth leadership.
Strike off versus liquidation
Strike off (dissolution) suits solvent companies with no outstanding liabilities. It is fast, low‑cost and can be completed online using Form DS01.
For solvent companies with shareholder distributions over £25,000, a Members’ Voluntary Liquidation is preferable for tax reasons. For insolvent companies with creditors or HMRC likely to object, a Creditors’ Voluntary Liquidation is needed.
Directors should choose strike off only where the business is genuinely solvent; using strike off to evade creditors risks personal liability and legal penalties.
Eligibility for voluntary strike off
Directors can apply for dissolution only if the company:
- Has not traded or changed its name in the last three months
- Has no outstanding debts, claims or ongoing insolvency proceedings (including CVA’s)
- Has distributed all assets to shareholders
- Has up‑to‑date statutory accounts and tax filings
Directors must notify all interested parties (creditors, employees, shareholders) and provide Companies House with DS01 signed by the required majority of directors. A notice appears in the Gazette; if no valid objections arrive, dissolution follows roughly three months later.
Pre‑strike off checklist (must do before applying)
- Distribute company assets to shareholders; any assets left after dissolution become Bona Vacantia and pass to the Crown
- Pay final wages and follow redundancy procedures if making staff redundant
- Settle Corporation Tax, PAYE, NI and other tax liabilities and file final accounts and company tax return marked “final”
- Close payroll and deregister for VAT with HMRC
- Close company bank accounts
- Notify HMRC and all interested parties within seven days of lodging the DS01
If circumstances change (company trades, changes name, or becomes insolvent) directors must withdraw the application by filing form DS02.
Risks and disadvantages
- Creditors can object to a strike‑off; an upheld objection suspends the dissolution.
- A creditor can apply to restore a dissolved company to the register to pursue unpaid debts.
- False or incomplete information on the application can lead to director disqualification, fines or criminal sanction.
- Strike off removes entitlement to director redundancy payments that may be available during a formal liquidation.
For companies with potential contingent liabilities (eg employee claims), strike off can be unsafe; professional confirmation of solvency is strongly recommended.
Alternatives to strike off
Members’ Voluntary Liquidation (MVL):
A solvent company can appoint a liquidator to realise assets, pay creditors and distribute surplus to shareholders. MVL costs more than strike off but can be tax‑efficient where shareholder distributions are significant.
Creditors’ Voluntary Liquidation (CVL):
This is the formal route for insolvent companies; overseen by an insolvency practitioner and prevents later restoration by disgruntled creditors.
Directors should weigh costs, tax consequences and potential redundancy entitlements before choosing the route to close a company.
Practical advice
Seek professional advice to verify solvency and to compare strike off, MVL and CVL outcomes. Early analysis of creditor positions often identifies restructuring options that preserve value and reduce the risk of later claims.
Register the Company as Dormant
If directors may reuse the company later, registering it as dormant is a low‑cost alternative to strike‑off. Dormant status keeps the company on the Companies House register without trading, avoiding the expense and administrative hassle of restoring a dissolved company within six years.
To make a company dormant, stop all business activity, close active accounts where appropriate, file dormant company accounts and a confirmation statement on time, and notify HMRC that the company is dormant. Dormant status preserves the company’s legal existence while minimising ongoing compliance work and costs.
Key Takeaways
- Strike off (voluntary dissolution) removes a company from the Companies House register and ends its legal existence; it suits solvent companies with no outstanding liabilities.
- Directors must file Form DS01, notify creditors, employees and shareholders, settle final wages and taxes, file final accounts marked “final,” and close bank/payroll accounts before applying.
- Creditors or other parties can object; an upheld objection suspends dissolution, and creditors can later seek restoration to pursue unpaid debts.
- Liquidation (MVL or CVL) is the correct route for most active companies; an MVL can be tax‑efficient for large shareholder distributions, while a CVL protects creditors and is managed by a licensed insolvency practitioner.
- Director redundancy may be available in liquidation, but not after DS01 strike off; directors should verify solvency and seek professional advice before choosing a closure route.
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