Running a company involves a wide array of tasks and obligations, one of the most significant being maintaining good standing with HMRC (Her Majesty’s Revenue and Customs).
As a key regulatory body in the UK, HMRC oversees various business operations, particularly those related to taxes.
Therefore, any substantial changes to a company’s status, including its cessation or dissolution, must be reported promptly to HMRC.
One such critical change that necessitates immediate communication with HMRC is a company strike-off.
To ‘strike off’ a company essentially means to dissolve it, eradicating its existence as a legal entity.
This is a complex and multi-step procedure that necessitates careful planning, thorough documentation, and clear communication with various parties, including HMRC.
You might wonder: how should one go about this?
What is the process for informing HMRC of a company strike-off?
What documentation is necessary?
How does this process fit within the broader picture of company dissolution?
The following sections aim to answer these crucial questions, offering an in-depth guide to effectively and legally inform HMRC about your decision to strike off a company.
From tax clearance procedures to form submissions and from associated costs to debt-related considerations, we will walk you through the ins and outs of the entire process.
Understanding these procedures is critical to avoid complications down the line, such as penalties for non-compliance or delays in the dissolution process.
Equipped with this knowledge, you will be better prepared to navigate the strike-off process, ensuring that everything is in order and done in accordance with UK law.
Read on to discover the best practices for managing your company’s strike-off and how to successfully communicate this to HMRC.
How to Inform HMRC of a Company Strike-Off
In the United Kingdom, if you want to ‘strike off’ your company – that is, dissolve it so it no longer exists – you have to inform the HMRC first.
It’s a legal requirement as part of the strike-off process to let HMRC know, which ensures that all due taxes are paid, and the company’s tax obligations are settled.
First, ensure that your company’s corporation tax and VAT returns are up-to-date.
Then, provide notice of your intent to dissolve the company by sending a written letter to HMRC.
The letter should include details such as the company’s name, registration number, the date you plan to apply for dissolution, and a declaration that the company will not trade or carry out business activities beyond the date stated in the letter.
The company must also de-register for VAT and PAYE and submit any final corporation tax return within 12 months from the date of ceasing trading.
The corporation tax return should include the date the company ceased to trade, so HMRC knows it won’t expect any further returns from the company.
What is a DS01 Form, and How Do You Submit it to HMRC?
A DS01 form is a legal document used to apply for striking off a limited company in the UK.
It’s submitted to Companies House, not HMRC.
However, before submitting a DS01 form, you must settle any dues with HMRC, as mentioned above.
After you’ve informed HMRC and settled all tax obligations, you can fill out a DS01 form.
This form must be signed by the majority of the company’s directors and sent to Companies House with a small fee.
You must also send a copy of the application to members, employees, creditors, directors, and anyone else who could have an interest in your company within seven days of submitting the form to Companies House.
Remember, the DS01 form only becomes effective if Companies House accepts the application and the notice of the proposed strike-off is published in the Gazette.
Related: Compulsory Strike-Off Action Has Been Discontinued.
How Much Does it Cost to Strike Off a Limited Company?
The cost of applying for company strike-off in the UK by submitting a DS01 form is £10.
However, this doesn’t include any potential costs for settling the company’s debts, handling asset distribution, or professional services like accounting or legal help you may require during the process.
It’s worth noting that if the correct procedure isn’t followed or there are objections to the strike-off, you may incur additional costs and delays.
Therefore, ensuring that everything is in order before beginning the strike-off process is vital.
Can a Company With Debts Be Struck Off?
In theory, a company with debts can apply for a voluntary strike-off. However, in practice, it’s not straightforward.
Creditors can object to the company’s dissolution if they’re owed money.
If a creditor or any other interested party objects to the strike-off application and provides sufficient evidence of the company’s debts or other reasons why it should not be dissolved, Companies House will not strike off the company.
If a company is insolvent (i.e., it cannot pay its debts), there are other procedures to follow, such as administration or liquidation.
If you’re considering striking off a company with debts, it’s strongly advised to seek legal or professional advice to understand the best route for your circumstances.
Related Post: How Long Does it Take to Strike Off a Limited Company?
Final Notes On Informing HMRC of a Company Strike Off
Informing HMRC of a company strike-off isn’t just a formality.
It’s a crucial step in the dissolution process, as it ensures the company fulfils its tax obligations and protects directors from potential penalties.
Before starting the strike-off process, make sure your company’s tax and VAT returns are up to date, all dues are settled with HMRC, and you’ve sought advice if necessary.
While this article provides a general guideline, remember that each company’s situation may vary.
Therefore, you may need to seek professional advice specific to your situation.
The key is to ensure everything is done correctly and legally.
It might seem a bit complex, but with due diligence and the right guidance, the process of informing HMRC about a company strike-off can be handled smoothly.
If you’re a director of a struggling limited company and the idea of striking off your business from the Companies House register seems daunting, you don’t have to go through this process alone.
At Marchford, we specialise in providing the necessary guidance, support, and expertise to help you navigate this challenging situation.
We understand that each company’s journey is unique, and so is the strike-off process.
Our team of experts is here to ensure you fulfil all your legal obligations and responsibilities, making the process as seamless as possible.
Don’t let the intricacies of business dissolution overwhelm you. Reach out to Marchford today.
Let us simplify this journey for you.
With our help, you can close this chapter of your business with confidence and ease.
Trust Marchford, your reliable partner during challenging times. Together, we can pave the way for a smooth transition and a new beginning.
