Strike Off Advantages and Disadvantages

Using the Strike Off process may be the right solution to close your company. However before deciding to go ahead with this option it is useful to understand the main advantages and disadvantages. You should ensure you take expert advice before deciding to Strike off your company.

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Advantages of Strike Off

1. Strike Off can be implemented quickly
If a company is dormant and has no creditors Strike Off is a quick way to close it. After three months the company will be taken off the register at Companies House. However if the company has any outstanding creditors three months notice must be given to them before the application can be submitted.

2. Strike Off is inexpensive to implement
The cost to submit a Strike Off application form at Companies House is minimal. Even if you decide to pay for professional help the dissolution process will be far less expensive than the cost of liquidating the company.

3. No investigation of directors conduct
After a company is Struck Off there is no formal investigation of the conduct of the directors. As such there is no risk of being accused of wrongful trading unless the company is subsequently revived by a creditor and a winding up petition issued.

4. No further requirement to file annual returns and accounts
Once a company is struck off there is no longer any need to file ongoing annual returns and accounts with Companies House. If the company is left dormant rather than being struck off the appropriate accounts and returns must still be filed. Financial penalties will be levied on the directors if this is not done.

Disadvantages of Strike Off

1. Strike off does not write off outstanding debt
If a company is Struck off but has outstanding debts these will not be written off. Any outstanding creditor can still apply for the company to be reinstated for up to 20 years. They can then take enforcement action against the company. The solution is therefore not ideal if the company has outstanding debt.

2. Creditors may reject a Strike Off application
If the company owes any money to any creditors they must be informed of the intention to Strike Off the business. If a creditor objects the application may not be allowed. Then an alternative solution will have to be used to close the company. Alternatively the directors must wait for the creditor to issue a petition for the company’s winding up.

3. A company can be revived after Strike Off
Any shareholder, creditor or liquidator can apply to revive the company for up to 20 years after dissolution and then issue winding up proceedings against it.

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