Did you recently receive your first notice for compulsory strike off? You are probably wondering what to do and how to stop it. We know how overwhelming and confusing this situation can be for business owners. With this article, we will help you understand what a first gazette notice for compulsory strike-off is and will explain what you need to do about it.
What is Compulsory Strike Off?
Compulsory strike off is a process in which a company’s registration is revoked forcibly, and the company is struck off the Companies House records. This is usually a result of the business not complying with the regulations of the Companies House.
Why does a compulsory Strike Off happen?
Compulsory strike-offs don’t just happen. They are usually a result of Companies House believing a company is no longer in business, and this can be due to the following reasons:
- Failure to file tax returns and annual statements
- Failure to inform Companies House of a new corporate address
- Failure to submit documents such as annual accounts or the confirmation statement over a long period.
- Non-compliance to Company Acts and Regulations, for instance, no directors are appointed in the company.
- Suppose Companies House doesn’t get a response from the company after contacting them. In that case, they will assume they are no longer in business.
How to Stop a Compulsory Strike Off
Getting a compulsory strike off is not the end, and there are steps to take to stop a compulsory strike-off. Not taking action on time can result in your business getting struck off the Companies House Register. How to stop the first gazette notice for compulsory strike-off is relatively easy, and here is what you need to do:
- Firstly, you need to respond to the Companies House notice as soon as possible. You can respond to them through a letter, email and phone call. Ensure your response includes the reasons your company should not be struck off, which include evidence of trading, etc.
- The next step you need to take is to fix the issue that led to the compulsory strike-off. This is usually overdue accounts and/or an overdue confirmation statement.
- You must also contact all creditors to explain the issue and negotiate repayment terms.
- If it is an issue of an overdue annual account, prepare and file it- this attracts a late filing penalty.
- For an overdue confirmation statement, you can prepare and file it- this doesn’t attract any penalty.
How Quickly Will Companies House Start the Process if a Company Falls Foul?
How quickly Companies House start the process can differ, but it most likely depends on the reason the company is being struck off. However, the following occurrence must have taken place for Companies House to start the process:
- Failure to file annual accounts on time: there is no maximum time for how late Companies House will permit annual counts. The range for late filing penalties is usually 6 months and above, but sometimes Companies may start the process before this time.
- Failure to file confirmation statement on time: according to Companies House, you must deliver your confirmation statement within 14 days of the end of your company’s review period. Anything after the 14-day timeline, your company can be prosecuted or struck off. It is safe to say Companies House may start the process 15 days after the review period has passed.
- The moment your company doesn’t have any director appointed, then by default, the compulsory strike-off notification letter will be sent out. However, it may take Companies House months to act in this case.
What are the Implications of a Compulsory Strike Off?
Compulsory strike-offs can have a series of damaging events. They can result in business closure if no action is taken immediately.
- The first implication of compulsory strike-off is that the company can no longer trade as a limited company.
- All the company’s accounts will be frozen, and all assets will be confiscated.
- Investigations will be done on the action of the director that resulted in the strike-off
- A compulsory strike-off will also make employees of the company out of jobs.
What is a First Gazette Notice for Compulsory Strike Off?
A first gazette notice for compulsory strike off is a notice sent by the Companies House that serves as a warning to a company about to be struck off the official register of companies. Before striking off a company, the Companies House will post a warning in the relevant gazette. These gazettes are usually The London Gazette (United Kingdom and Wales), The Belfast Gazette (Northern Ireland), and The Edinburgh Gazette (Scotland). Gazettes are public journals that advertise statutory notices. All notices in a gazette are official and legal.
It takes 3 months after the first gazette notice for Companies House to strike off a business.
What Should I Do if My Company Has Been Served a Compulsory First Gazette Notice?
If your company is served a compulsory first gazette notice, you have to act on time for your company not to be forcibly struck off by the Companies House. For your company to remain active, you must fix the issues that led to the Companies House taking this action and then apply for a suspension.
Depending on what caused the gazette notice, you may have to keep your account up to date, including filing confirmation statements or missing accounts.
However, if you are no longer in business, you may not take action and let the process take full course. Also, creditors might see the gazette notice and launch a challenge to prevent a strike-off. If your company owes debts, it is recommended you use voluntary liquidation to prevent creditors from taking legal action.
Compulsory Strike off Consequences – What if I have Assets in My Company?
When a company is closed after a compulsory strike off, all assets and cash are considered “ownerless” and transferred to the crown. Normally, as a business owner, if you have assets in your company, you will want to extract them to retain ownership. In this case, you will submit an objection to the strike-off with detailed reasons. If the objection is upheld, your company will remain active, allowing you to continue trading or move your assets out of the company. If you want to do this, it is advised you seek the help of a professional.
What is a Voluntary Strike Off?
A voluntary strike off is when the directors of a company decide that the company is no longer in business and willingly close it. It is called a voluntary strike off because the decision is strictly that of the company's directors.
To do this, the company will pay off all debts and submit an application to the Companies House. Company House must accept the application before the company can be officially closed down.