Compulsory Strike off query

[RuthR]

I have a commercial property business and have been approached by a perspective tenant, however having done a bit of background research, I’ve found that in the last four years they have had six companies all on which have had a compulsory strike off for not submitting any accounts/paperwork.

Can anyone explain to me what might be going on here, is it a tax avoidance scam, I’m just not sure.

Thanks in advance

 

[mahad]

This is a possibility, as the repeated strike-offs could be a way to avoid paying taxes and debts. It could also be because of poor bussines practices their company might have a history of mismanagement, leading to neglect of legal requirements like filing accounts.
It's better to be vigilent with such cases, but if you still want to consider him, I'd say to take a lawyer who is specializing in commercial property, they'll definitely know what to ask the guy and to guide you in the right direction

 

[Paul FilmMaker]

I have a commercial property business and have been approached by a perspective tenant, however having done a bit of background research, I’ve found that in the last four years they have had six companies all on which have had a compulsory strike off for not submitting any accounts/paperwork.

Can anyone explain to me what might be going on here, is it a tax avoidance scam, I’m just not sure.

Thanks in advance

Strike offs could be anything but as a general rule, all of their businesses being struck off is a major red flag.

If I was being kind, I'd say they'd started some ideas and then just didn't want to pursue them so they simply let the businesses lapse and be struck off.

Being unkind, it could be tax evasion. Or they've started businesses, defrauded people, taken the money and run. Or all their businesses failed en masse.

I'd veer towards caution. Just my £0.02

 

[Frank Wessely]

Hi @RuthR

And also make sure that you take an appropriate security deposit against future defaults. And a personal guarantee. And you could ask to take references from other landlords these people have dealt with previously.

Thanks.

 

[Porky]

I don’t see it as that big a deal myself, you don’t know the circumstances of other business closures and we have gone through possibly the worst trading times with covid known to man. Equally you could find a “better tenant” and their business could equally fail and leave you up the creak so to speak.

My question would be can they afford the rent, yes or no? If more concern and zero trading accounts then can they send you a P&L forecast, can they give you a guarantee or worst case scenario can you get a quarters rent as deposit and bill three monthly in advance, something that works for you if they default to reduce your risk.

Not sure of the demand you have but imo it’s still tough out there, you want a deal that can work for you if it goes belly up, either that or as I say try and find another tenant you feel more confident with but nothing is ever 100%

Good luck

 

[mahad]

Hi @RuthR

And also make sure that you take an appropriate security deposit against future defaults. And a personal guarantee. And you could ask to take references from other landlords these people have dealt with previously.

Thanks.

How would one search his history of land lords without asking directly him? If he's a sneaky client then most likely he will give his friend's number as the "land lords"

 

[Frank Wessely]

Hi, yes just ask. There is always a risk that a prospective tenant can be untruthful. If the previous properties were looked after by Managing agents then that would appear more credible and you can ask them for the backgrounds.

 

[IanSuth]

Ask them why they failed and what they are doing different. The way they answer will likely give you an idea of whether it is worth digging further. I am sure if you have any experience in business you will soon recognise evasive answers and weaseling

 

[Spongebob]

Plenty of companies are incorporated and then abandoned to dissolution without ever having traded. It is not necessarily suspicious to have had a few companies dissolved. Failure to submit a Confirmation Statement is the normal reason for Companies House striking off a company - it happens automatically after a few months.

On the other hand, abusing this process is very simple and common. Tax debts built up in a couple of years trading can be dumped without anyone knowing they even exist by allowing a company to be struck off for non-submission of the Confirmation Statement. A new company can then take over the trading name. Because no formal insolvency process has been followed nobody is any the wiser.

Presumably you insist on a personal guarantee from tenants.