Company strike off insolvancy woes

[sigma11904]

Hi,

I would welcome some advice on what to do about my Limited Company. I haven't filed accounts or a confirmation statement in some time and, as a result, Companies House had begun the process to automatically strike it off. I had been counting down the days for CH to do this before, roughly a week before the countdown was set to expire, a creditor objected.

My business, AFAIK, only has one creditor, which is HMRC for unpaid Corporation Tax payments, circa £14k that they are immediately aware of. I had borrowed no other money via the company, so it could only feasably be them. There are also several years of accounts that I have not filed, although I had registered dividend payments as income through my tax returns for those years. I've come to realise that some of the payments I've taken are most likely to be considered as overdrawn director's loans instead if my accounts are looked at.

I hold my hands up and say that the whole situation is a mess and I aware my own obligations haven't been met. Close family illness and my own poor MH meant that I buried my head in the sands with a lot of this, letting Rome burn as everything else was going on. I, admittedly, was hoping that the company would be struck off by the end of the month so the CT liability so I could then look at a debt relief order for my other personal debts, including Income Tax.

The company has no assets, no money, it isn't actively trading and hasn't for some time, and I have no money to fund a liquidation. I barely have the proverbial pot on a personal level to pay for anything.

I am quite stressed at what is set to happen next. My preferred situation was to see the company close as I expected during the strike off process, but that hasn't happened. As I understand it from reading on here and elsewhere, there's a possibility that Companies House may still push ahead with the closure at a later date if I 'hold out', but I don't know enough about this to know for sure, and I don't know the timescales.

At this stage, I'd appreciate some advice, any advice, on what I should do or can do to get out of this mess. I am very aware of the mistakes I've made and just want to get the slate clean so I can move on with my life.

 

[Lisa Thomas]

Hello

If you have no personal assets whatsoever to make any payment or settlement of the likely overdrawn DLA, then you don't really have much choice.

If you are unable to pay some of your DLA back to cover the costs of liquidation then there is little you can now do but wait to see whether HMRC will pay to liquidate via the court, or whether CH will eventually strike it off.

In the meantime I would try your best to move on and get your MH back on course.

Best of luck.

 

[Porky]

@sigma11904
I'm sorry to read your post, its so difficult for most of us in business and nobody sets out to fail. Its easy for me to say to you but try not to get stressed about this, please dont. Its one of those things, nobody is perfect and you wont be the first and your situation is not insurmountable you can get it sorted.

This is just my opinion but if HMRC are owed money they will keep objecting to strike off automatically, if you could raise 4 to 5k you could pay a firm to do the administration for you and at least you would have some control of the process.A firm like @Lisa Thomas previous poster is what you need really.

Ironically, in an administration HMRC would be unlikely to get paid anyway in these circumstances BUT the elephant in the room is the DLA. That would be a personal debt - you not in a position to pay it anyhow so either ultimately some kind of very long term debt repayment as you say or personal bankruptcy but I wouldn't stress, put each fire out as it comes along. There is always s a way forward at the end of the day. Your personal situation being a separate situation to your business situation - each one requiring different process.

If it was me, I think i would be trying to tackle the business closure first, get some sort of accounting done to fully understand the situation, what is the DLA can it be reduced any? Because ultimately you are on for that, get your records straight even if you do nothing with them. if it went to an official receiver they would be digging up all your accounting history anyhow so you need clarity anyhow and frankly its better to hold your hand up to owe money and deal with that separately than to be found fraudulent / trying to hide something. This is why I would tackle the business side first.

You can keep your head in the sand and hope its gets struck off and give it more time in hope but the way HMRC are chasing debt currently I think they will constantly object and I would rather control something like this myself than have to go through the process and possible interviews controlled by someone else.

I really wish you well, you are between a rock and hard place but it needs sorting so tackle each part a bit at a time. You can do it, don't stress it will soon be old news.

Good luck.

 

[numbersrule]

You are doing the right thing by asking questions and seeking advice.

I agree with Porky and would add that as you are no doubt aware, communication is key.

Don't lose hope because so long as you are open and transparent and so long as you respond honestly to communications from HMRC and CH you will find a way. Now that you have started to help yourself, other help may well follow.

 

[Lisa Thomas]

This is just my opinion but if HMRC are owed money they will keep objecting to strike off automatically, if you could raise 4 to 5k you could pay a firm to do the administration for you and at least you would have some control of the process.A firm like @Lisa Thomas previous poster is what you need really.

Thank you for recommending me.

Not trying to get too technical, but it's important to clarify that Administration would not apply here. That's a different insolvency procedure to rescue a company.

Liquidation is the only real procedure that would fit, other than letting the company be dissolved.

A compulsory liquidation in court would cost c£3k so would be the cheapest option if the director wanted to repay some of the DLA to cover those costs, although they will have to find the funds in full up front as opposed toe an our of court creditors voluntary liquidation procedure which will likely cost more but might be able to be repaid in installments.

 

[Lisa Thomas]

Ironically, in an administration HMRC would be unlikely to get paid anyway in these circumstances BUT the elephant in the room is the DLA. That would be a personal debt - you not in a position to pay it anyhow so either ultimately some kind of very long term debt repayment as you say or personal bankruptcy but I wouldn't stress, put each fire out as it comes along. There is always s a way forward at the end of the day. Your personal situation being a separate situation to your business situation - each one requiring different process

There will be other personal insolvency procedures that might fit better than long term repayment or Bankruptcy like a debt management plan, debt relief order, or IVA.

OP should take advice form Stepchange on their personal insolvency options if the DLA is called in and/or they have other unmanageable creditors.

StepChange Debt Charity. Free Expert Debt Help & Advice

 

[Michael Loveridge]

In view of the fact that you're in such a poor financial and personal situation my inclination would be to do nothing at all.

You clearly can't afford to liquidate the company, and I really can't see that there would be any benefit to you personally even if you could afford to. HMRC can object to the striking off till they're blue in the face, but Companies House have now adopted the approach that if a creditor who objects to a striking off hasn't actually taken any action against the company within the preceding 6 months then the objection will be ignored and the striking off will go ahead anyway.

The striking off will be suspended if action is taken within, usually, 14 days of CH notifying the creditor, but the chances of HMRC issuing a winding up petition for such a small sum of money must be negligible. So if nobody takes any action the company will be struck off, whether HMRC like it or not, and that should be an end to the matter.

 

[BIL310]

In view of the fact that you're in such a poor financial and personal situation my inclination would be to do nothing at all.

You clearly can't afford to liquidate the company, and I really can't see that there would be any benefit to you personally even if you could afford to. HMRC can object to the striking off till they're blue in the face, but Companies House have now adopted the approach that if a creditor who objects to a striking off hasn't actually taken any action against the company within the preceding 6 months then the objection will be ignored and the striking off will go ahead anyway.

The striking off will be suspended if action is taken within, usually, 14 days of CH notifying the creditor, but the chances of HMRC issuing a winding up petition for such a small sum of money must be negligible. So if nobody takes any action the company will be struck off, whether HMRC like it or not, and that should be an end to the matter.

Michael, companies house has been trying to strike off my company for over 2 years now and each time HMRC objects, I haven't filed any accounts at all for this company and there is no assets or money left.
Would the advise be the same?

I think 3-4 times now they've tried to strike it off and HMRC objects then sends a letter saying they'll continue to do so until accounts are filed. I don't have any money to file accounts.

 

[Elliot Green]

Hi,

I would welcome some advice on what to do about my Limited Company. I haven't filed accounts or a confirmation statement in some time and, as a result, Companies House had begun the process to automatically strike it off. I had been counting down the days for CH to do this before, roughly a week before the countdown was set to expire, a creditor objected.

My business, AFAIK, only has one creditor, which is HMRC for unpaid Corporation Tax payments, circa £14k that they are immediately aware of. I had borrowed no other money via the company, so it could only feasably be them. There are also several years of accounts that I have not filed, although I had registered dividend payments as income through my tax returns for those years. I've come to realise that some of the payments I've taken are most likely to be considered as overdrawn director's loans instead if my accounts are looked at.

I hold my hands up and say that the whole situation is a mess and I aware my own obligations haven't been met. Close family illness and my own poor MH meant that I buried my head in the sands with a lot of this, letting Rome burn as everything else was going on. I, admittedly, was hoping that the company would be struck off by the end of the month so the CT liability so I could then look at a debt relief order for my other personal debts, including Income Tax.

The company has no assets, no money, it isn't actively trading and hasn't for some time, and I have no money to fund a liquidation. I barely have the proverbial pot on a personal level to pay for anything.

I am quite stressed at what is set to happen next. My preferred situation was to see the company close as I expected during the strike off process, but that hasn't happened. As I understand it from reading on here and elsewhere, there's a possibility that Companies House may still push ahead with the closure at a later date if I 'hold out', but I don't know enough about this to know for sure, and I don't know the timescales.

At this stage, I'd appreciate some advice, any advice, on what I should do or can do to get out of this mess. I am very aware of the mistakes I've made and just want to get the slate clean so I can move on with my life.

A potential issue is the failure to file accounts and confirmation statements whilst the company is still live. This can result in fines for instance. When there has been no trading these documents do not have to be too complicated to get filed but you might need some assistance if this isn't something you are familiar with.

 

[Daybooks]

Just focussing on some comments made by yourself and not to any responses that may or may not have already addressed the issues:

‘AFAIK’ is not good enough. It is your Company - you must know if you owe money to others.

Similarly with dividends and director’s loan account. Dividends payments are either lawful or unlawful. If you have corporation tax liability you possibly have accounting profits to support dividends. It is all matter of fact.

Establish those facts; use an accountant if needed. The beauty of accounts is that they tell you a company’s financial position. It is hard to think of anything more powerful.

Gook luck.

 

[Lisa Thomas]

Companies House have now adopted the approach that if a creditor who objects to a striking off hasn't actually taken any action against the company within the preceding 6 months then the objection will be ignored and the striking off will go ahead anyway.

Hi Michael

Do you have any links confirming this new stance/policy by CH, please?

TVM

 

[Michael Loveridge]

Hi Lisa

I received this response recently to an objection I'd filed to a strike off:

Dear Customer

Thank you for your objection to this company being struck off :

[NAME OF COMPANY] LIMITED

Your objection has not been successful as the evidence provided is not dated within the last 6 months.

We have placed a temporary hold of 14 days from today on dissolution action.

To provide more recent evidence you will need to re-submit your application to object to this company being struck off. This can include invoices, court documents, general correspondence or emails between you and the company, to show that you are actively pursuing them for an outstanding debt.

All evidence must show the full company name, including the word 'Limited', or equivalent and be dated within the last 6 months.

We will then reconsider your objection application.

If you do not pursue your objection application within 14 days, dissolution action may resume after this period, which could result in the company being struck off the Companies House register.

This is a new service. Help us improve it by completing our quick survey

Yours sincerely ,

Hiru

Dissolution Case Officer

So basically what they're saying is that unless active steps are being taken to pursue the debt the dissolution will go ahead. If, like the OP, I actively wanted a company struck off then I would email Companies House pointing out that HMRC had taken no steps to recover the alleged debt, so that their objection should be ignored.

 

[Lisa Thomas]

Interesting.

Although I would expect HMRC to send a chaser/reminder letter within 6 months...

Also, the onus here seems to be on the creditor providing evidence they have pursued the debt based on their objection.

I guess any Director could pretend they haven't been chased for 6 months, even if they had so I wonder if the policy is the same for the director/Company?

 

[Elliot Green]

Hi Michael

Do you have any links confirming this new stance/policy by CH, please?

TVM

Companies House FOI people wrote to me on 23.12.2024 on this point and they said:

"...General guidance relating to objections is available on the Companies House website. This is exempt from disclosure under section 21 of the FOIA as it is accessible to you.

To be of assistance, if an acceptable objection is received from any party, it remains in place for 6 months, regardless of whether it is from another government department or a member of the public. Unless a further objection is received prior to the expiry of that objection, the dissolution action will recommence. It is possible for more than one party to object to the strike off of a company and the suspension of the action will remain in place until all objections are removed."

 

[Lisa Thomas]

Thanks Elliot.