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.
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:
📞 0800 611 8888
🌐 www.umbrella.UK
Get FREE business insolvency, rescue or recovery advice today*
Call 01625 546 240 now or request a callback below. All enquiries are strictly confidential. Click here to see our privacy notice.
The role of licensed insolvency practitioners. *We don’t charge for an initial consultation, but it may lead to an insolvency solution where our pre-appointment costs are reimbursed as part of the fee structure that creditors approve.