Active Proposal to Strike Off – A Small Business Owner’s Guide

If you’ve recently received a notice from Companies House saying your company has an “active proposal to strike off”, it’s essential to understand what this means, and what to do next. This guide is written for small business owners who may be facing financial difficulties or considering whether to let their limited company close.

We’ll explain what an active proposal to strike off involves, your responsibilities, potential risks, and what alternatives are available. We’ve also included a real-world case study and expert insights from Tom Fox, Head of Insolvency at Umbrella.UK Insolvency.

What is an active proposal to strike off?

An active proposal to strike off is a formal notice that Companies House intends to remove your limited company from the register. This process is also known as a company “strike-off” or “dissolution”.

The proposal may be:

Voluntary, when directors apply to dissolve the company (typically using form DS01)
Compulsory, when Companies House starts the process because the company has failed to meet its obligations (e.g. not filing accounts or confirmation statements)

In both cases, Companies House will publish a notice in The Gazette, the official public record, stating that your company is at risk of being struck off.

Why would a company be struck off?

There are several common reasons why a company may face an active proposal to strike off:

The directors voluntarily apply to close the business
The company is no longer trading
Annual accounts or confirmation statements haven’t been filed
The company has no remaining assets or liabilities
The company has no current business activity

Tom Fox, Head of Insolvency at Umbrella.UK, explains:

“Many small business owners believe that applying for strike-off is the simplest way to close a company. And in some cases, that’s true. But if your company owes money, especially to HMRC or creditors, this process can actually land you in serious trouble.”

What happens during the strike-off process?

Once an active proposal to strike off is initiated, the following happens:

Notice published in The Gazette
This gives creditors and interested parties a chance to object.
Two-month waiting period
Creditors can oppose the strike-off if they’re owed money or if the process is being misused.
Strike-off completed (If no objection)
After two months, the company is removed from the register, and it no longer exists legally.

Can you use strike-off if your company has debts?

In short: no. If your company owes money to creditors, including HMRC, suppliers or lenders, strike-off is not appropriate. Creditors can (and often do) object to the strike-off, halting the process.

Trying to dissolve a company with debts can even be seen as an abuse of process. If this happens, directors could be investigated for misconduct or face personal liability.

Tom Fox warns:

“We often see directors attempt to strike off a company without realising they have outstanding debts. This can result in serious consequences, including fines, disqualification and even personal legal action. Always seek professional advice before proceeding.”

Case Study: A Business Owner’s Costly Mistake

The situation
Claire ran a small marketing consultancy in Manchester. During COVID-19, business dried up and she stopped trading in late 2021. Thinking the company was dormant, she submitted a DS01 form to strike off the company in early 2023.

What Claire didn’t realise was that the company still owed around £15,000 to HMRC for unpaid VAT and bounce-back loan repayments.

What went wrong
Once HMRC saw the strike-off notice in The Gazette, they objected. The strike-off was suspended, and HMRC launched an investigation. Claire was contacted by enforcement officers, and eventually the company was forced into compulsory liquidation.

The outcome
Claire faced scrutiny over her actions and was nearly disqualified from acting as a director. She also had to pay some of the debt personally, as she had not used the loan correctly under the terms of the agreement.

What should you do if you receive a strike-off notice?

If Companies House has issued an active proposal to strike off, here are the steps you should take:

Don’t ignore the notice
This is a legal process, and inaction can lead to your company being dissolved, even if you don’t want it to be.
Check if it’s voluntary or compulsory
If you didn’t apply for the strike-off, Companies House may be forcing it due to non-compliance.
Seek professional insolvency advice
If your company has any debts, you must speak to a Licensed Insolvency Practitioner before proceeding.
File outstanding documents
If the strike-off is due to late filings, you can usually stop the process by submitting your overdue accounts or confirmation statements.
Consider alternatives
If you’re struggling financially, other options such as Creditors’ Voluntary Liquidation (CVL) may be more appropriate.

Alternatives to strike-off

If your company is insolvent (i.e. cannot pay its debts), the following options might be more suitable:

Creditors’ Voluntary Liquidation (CVL)

This is a formal insolvency process that allows directors to voluntarily close an insolvent company. It ensures creditors are treated fairly and limits the risk of director liability.

Company Voluntary Arrangement (CVA)

A legally binding agreement with creditors to repay debts over time while continuing to trade.

Administration

Suitable for larger businesses, this offers legal protection from creditors while a solution is worked out.

Tom Fox notes:

“Insolvent companies should never go down the strike-off route. A CVL protects the directors, ensures compliance with the law, and shows creditors that you’re handling the situation responsibly.”

Final thoughts

An active proposal to strike off can seem like a low-cost, easy solution, but only in the right circumstances. If your company is solvent and has no debts or legal issues, voluntary strike-off can be a valid route.

However, if there are any outstanding liabilities, attempting to dissolve the company could trigger serious consequences. Always seek professional advice before taking action.

Need advice? Speak to Umbrella.UK Insolvency

If you’ve received a strike-off notice or you’re unsure whether your company is eligible for dissolution, Umbrella.UK Insolvency can help.

We are based in Wilmslow, Cheshire but offer a free, confidential initial consultation to small business owners and company directors across England and Wales.

Contact us today to speak to a Licensed Insolvency Practitioner:
📞 01625 546 240
🌐 www.umbrella.UK

What our clients tell us

Tom Fox was incredibly helpful as I prepared to liquidate a couple of companies - clear advice, a respectful approach to both myself as director and the creditors, and a reasonable fee structure vs many of the national IP's I spoke to whilst researching who to work with.

Mike S

I engaged Umbrella accountants to oversee a Members Voluntary Liquidation for the small consultancy business I've been running. The team talked me through the MVL process, steps and requirements. The paperwork involved was well explained and straightforward, with the initial disbursement of funds handled very quickly and professionally under tight deadlines.

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I extend my appreciation of your professional efficiency in handling my company business and herewith say thank you.

Maxine R

Umbrella.UK Insolvency guided me as sole Director of my small limited company, and the shareholders, through every step of a Members Voluntary Liquidation in a very efficient manner. The steps required were clearly laid out and proactively managed by their licensed practitioner. From first meeting through to an interim distribution of funds to shareholders took only a few days in our case. Thereafter, Umbrella will be managing all of the downstream actions required to complete the process with HMRC and Companies House, through to the final discharge of the company.

Alex O

I'd just like to thank Tom for your help with the closure of my company. You have been highly efficient and very professional throughout. Thank you.

Tony D

First of all, I would like to say a BIG Thank You for all of your assistance over the past year. I would not be in the positive state of recovery without Umbrella Insolvency. Your care and assistance at the application stage last summer, along with the advice throughout the year, has been great. I would not hesitate to tell anyone in my negative situation where to turn to.

Mr TM

Before I came to Umbrella.UK Insolvency I was in a bad place mentally due to debt because I believed I would be in my current situation for a long time to come. Umbrella.UK Insolvency walked me through my options and helped me pick the best one. I am genuinely amazed at what they managed to do for me and can now afford to live comfortably, and without the constant worry of debt looming over me.

I engaged Tom to arrange an IVA for me after I ran into financial difficulties as a result of the closure of my company. He introduced me to Sarah and both of them as a team worked tirelessly through Lockdown to get the best outcome for me and my family. Both Sarah and Tom were patient, thorough and incredibly compassionate for our situation. They attained the best outcome for us and I couldn't speak more highly of them. Thank you to you both, Amazing work.

Thank you very much for your assistance in a successful proposal. We are ever so grateful as this is a chance to transform our lives; or rather you have given us a second chance to have our lives in order. Thank you for your patience and perseverance throughout that you showed.

Thank you so much for your help with my IVA. As an ex-company Director my life took a downward spiral when creditors from my liquidated company called upon my personal guarantees. I had been treading water for months, ran up credit card debts and borrowed from family. When a creditor instigated bankruptcy proceedings against me I thought I was going to lose my house. I contacted Umbrella.UK Insolvency who stopped all the phone calls and threatening letters. Umbrella.UK Insolvency explained things in a way I could understand. They negotiated with creditors and my IVA went through, now I can sleep at night again and I kept my home. Thomas Fox was extremely knowledgeable and I truly thank him and his team.

Paul G

Following a personal recommendation, we appointed Umbrella.UK Insolvency to handle the voluntary liquidation of our business (MVL). Tom and his team were excellent, keeping us well informed throughout and working effectively with the company's accountants to ensure all documentation was produced and filed on time. I have since recommended Umbrella.UK to friends looking for similar services and I have no hesitation in recommending them more widely.

Kevin B

I engaged Umbrella .UK Insolvency to oversee a Members Voluntary Liquidation for the small consultancy business I've been running. The team talked me through the MVL process, steps and requirements. The paperwork involved was well explained and straightforward, with the initial disbursement of funds handled very quickly and professionally under tight deadlines.

Brendan N

Thank you to Tom Fox at Umbrella Insolvency for helping me close my limited company after being forced to close it due to IR35 issues. Tom clearly has a lot of experience doing MVLs to help limited contractors like myself caught by IR35. I was surprised by how much money I was actually left with. Very impressed, thank you!

David G

I had the pleasure of working with Umbrella.UK for an insolvency matter. Their compassionate approach, coupled with their expertise, helped me find the right solution for my company's financial difficulties. I highly recommend their services.

M Harris

Umbrella.UK's team of insolvency practitioners demonstrated exceptional knowledge and professionalism throughout our engagement. Their ability to provide clear solutions and communicate complex matters made the CVL insolvency process much more manageable.

Emma D

As a director facing company financial difficulties during covid, I was overwhelmed and unsure about the next steps. Umbrella.UK stepped in and guided me through the options for helping my business recover with patience and expertise. I cannot thank them enough for their exceptional service and my company is in a much healthier situation.

Mark T

I am extremely grateful to Umbrella.UK for their prompt and effective insolvency assistance. Their deep understanding of the insolvency process and dedication to helping struggling businesses saved us from a dire situation. Thank you!

S Johnson

Tom Fox at Umbrella.UK provided invaluable guidance and support during a challenging time for our business. Their team of experts helped us navigate through insolvency with professionalism and efficiency. Highly recommended.

John S

Active Proposal to Strike Off – A Small Business Owner’s Guide

What is an active proposal to strike off?

Why would a company be struck off?

What happens during the strike-off process?

Can you use strike-off if your company has debts?

Case Study: A Business Owner’s Costly Mistake

What should you do if you receive a strike-off notice?

Alternatives to strike-off

Final thoughts

Need advice? Speak to Umbrella.UK Insolvency

What our clients tell us

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