What Is a Compulsory Strike Off & What Happens?

Understand what a compulsory strike off is, how it impacts your business's status in the Company House register, and what you can do about it.

Updated: July 11, 2024
Matt Crabtree

Written By

Matt Crabtree

|
Rebecca Goodman

Edited By

Rebecca Goodman

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Even the most wealthy company director with plenty of experience under their belt can unintentionally be noncompliant with regulatory requirements — and this is something that can also happen with novice entrepreneurs who are a bit less clued-up.

If you're in charge of running a company in the UK, you'll be pretty familiar with Companies House, but one slightly overlooked aspect of business management is the possibility of a compulsory strike-off — essentially when your business is legally no longer able to operate within the country.

This can be a pretty daunting prospect, so throughout this article, we'll be taking a closer look at some of the key concepts surrounding the process of receiving a compulsory strike-off — explaining things like why it happens and what kind of consequences company directors can expect to face.

Understanding the Companies House Register

To kick things off, let's touch more on the Companies House register and what it does.

Put simply, it's a register of information about all of the companies registered in the UK and it's a useful resource for a range of people, from businesses and regulators to the general public.

When you make your way over to the Companies House website, you'll find all kinds of essential details about a particular company, and that includes things such as its structure (like whether they're a limited company or not, for instance), directors, company accounts, and even the annual confirmation statement.

The importance of submitting accounts on time

As the director of a company, one of your most important responsibilities is usually to submit timely accounts to Companies House — since if you submit inaccurate documents that don't have up-to-date financial information in them, it can trigger the compulsory strike-off process.

The compulsory strike off

Now, let's move on to the main topic of this article — what are compulsory strike offs, and what's their relationship with the Companies House register?

In essence, it's a legal process where your company is removed from the Companies House register entirely, so you can't run your business anymore.

This can usually happen for various different reasons, but more often than not, the most common trigger is when you've failed to submit your accounts on time.

The impact on company directors

So, what are the repercussions of a compulsory strike off?

The buck usually stops with the company directors, since they play the most pivotal role in the overall compulsory strike off process.

If a UK company is struck off the register, it's always the directors that face potential personal liabilities — especially if they have not fulfilled their duties adequately.

So, if you're the director of a company, you will be held responsible when it comes to repaying any of the outstanding company debts or sorting out legal issues that can easily arise from a company strike off.

How the strike-off process works

There are a few different steps in the process for compulsory strike offs, but it typically always starts with Companies House identifying that a company has not filed its accounts or confirmation statements correctly.

The company directors are usually given multiple warnings and separate opportunities in order to rectify the situation fully before the striking-off process begins.

What are missing accounts and what are the consequences?

A company's accounts are one of the best ways of providing a snapshot of your business's financial health, so when you're not sending them in (either on time or at all), it’s going to raise a few red flags.

In fact, when a company fails to submit its accounts, it can violate some regulatory requirements set by the government in order to legally run a business in the UK, and also hamper transparency.

This lack of financial disclosure can lead to a loss of trust among your stakeholders including customers, suppliers, and other potential investors.

Company strike off and ceasing trading

In some cases, a company might have ceased trading, but none of the directors remembered or generally just neglected to inform Companies House appropriately. 

This can result in a delay when submitting your company accounts or confirmation statements, so this is another way that the compulsory strike-off process can be triggered.

Ultimately, if you’re the director of a company that’s no longer trading, it's important to be proactive and get in touch with Companies House straight away so you can avoid any unnecessary complications.

FAQs

How Does Compulsory Strike Off Affect Employee Contracts and Entitlements?

What Impact Does Compulsory Strike Off Have on a Company's Credit Rating?

What Safeguards Can Directors Implement to Prevent Compulsory Strike Off?

Can a Company Be Reinstated After Compulsory Strike Off?

How Does Compulsory Strike Off Impact a Company's Reputation?

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