Form DS01 is the application to Companies House for voluntary strike off: closing a solvent, inactive limited company by removing it from the register. It costs £13 online or £18 on paper. A majority of the directors must sign it, and the company must not have traded, sold stock or changed its name in the previous 3 months. Copies must go to shareholders, creditors, employees and others within 7 days. If nobody objects, the company is dissolved once 2 months have passed after the first notice in The Gazette.
When a company can use DS01
Voluntary strike off is for companies that have stopped trading and have nothing left to wind up. It is cheaper and quicker than liquidation, but section 1004 of the Companies Act 2006 bars an application if, in the previous three months, the company has:
- Changed its name. Any name change in the period;
- Traded or carried on business. Paying off liabilities left over from the old business does not count as trading;
- Sold stock. Made a disposal for value of property or rights that it held for resale in the normal course of trade;
- Done anything else. Engaged in any other activity, other than what is needed to make the application, wind up its affairs or meet statutory requirements.
Companies House's guidance adds that the company must not be threatened with liquidation and must have no agreements with creditors, such as a company voluntary arrangement. Breaching section 1004 is an offence. If those conditions are not met, the route is liquidation rather than strike off. For a solvent company with significant reserves, a members' voluntary liquidation is often the better choice in any case.
What to do before you file
Most problems with strike off come from filing too early. Before the DS01 goes in, the company should:
- Settle its tax. Send final statutory accounts and a Company Tax Return to HMRC and pay all corporation tax and other liabilities. Final accounts do not have to be filed at Companies House;
- Deal with employees. Follow the redundancy rules, pay final wages and tell HMRC the company has stopped employing people;
- Pay creditors. Any creditor can object to the strike off, and directors remain liable for their own conduct after dissolution;
- Distribute or dispose of assets. Anything still owned when the company is dissolved, including cash at the bank, becomes bona vacantia and belongs to the Crown under section 1012;
- Close the bank account. Once the final payments and distributions have been made, close it before applying, as the gov.uk guidance advises. Once the company is struck off, you lose access to company bank accounts and cannot send or receive money;
- Plan to keep records. Companies House advises keeping business documents such as bank statements, invoices and receipts for 7 years after strike off.
Taking the money out: the £25,000 rule
How the shareholders receive the remaining reserves matters for tax. Section 1030A of the Corporation Tax Act 2010 treats a distribution made in anticipation of a strike off as capital, not income, if two conditions are met. First, the company must intend to collect any debts owed to it and pay its own debts. Second, the total distributed must not exceed £25,000. Within that limit, shareholders are taxed under capital gains tax rather than at dividend rates. If the total is more than £25,000, the relief is lost and normal distribution treatment applies. HMRC's guidance in the Company Taxation Manual also says normal treatment applies if the company is not dissolved within two years. Above that level, a liquidation is usually needed to obtain capital treatment.
Filing the DS01
- Apply. File online through Companies House (£13) or post the paper form (£18). You cannot pay with a cheque drawn on the company's own account;
- Sign. The application must be made by the directors, or a majority of them;
- Send copies within 7 days. Section 1006 requires a copy to go to the members, employees, creditors, any directors who did not sign, and the managers or trustees of any employee pension fund. Failing to do so is an offence. Doing it with intent to conceal the application is an aggravated offence carrying up to seven years' imprisonment on indictment;
- First Gazette notice. Companies House checks the form and publishes a notice in The Gazette inviting objections;
- Dissolution. If nobody objects, the registrar may strike the company off once 2 months have passed since that notice. A second notice is published and, on its publication, the company is dissolved.
The gov.uk guide to striking off your limited company and section 1003 of the Companies Act 2006 set out the process.
Withdrawing the application: DS02
If the company stops being eligible, for example because it starts trading again or becomes insolvent, the directors must withdraw the application. This is done online or on form DS02, and only one director needs to sign. A company can also withdraw simply because the directors have changed their minds, provided it is still on the register.
If you need the company back
Dissolution is not always the end. Administrative restoration under section 1024 is available only for companies struck off by the registrar as defunct, not for companies that applied with a DS01. A voluntarily struck-off company has to be restored by the court. Companies House's restoration guidance says that, except for personal injury claims, the application must be made within six years of dissolution. Court restoration costs far more than a DS01, which is another reason to make sure the bank account, assets and tax are dealt with first.
Our company dissolution guide compares strike off with the other ways to close a company. If you would like the final accounts, tax return, distribution and DS01 handled in the right order, our company secretarial services team can manage the closure from start to finish.