What Is the Difference Between Dissolving and Striking Off a Company

When a company comes to the end of its life, there are different ways to remove it from the Companies House register. Two common terms used are dissolving and striking off a company. While they are closely related, there are important differences between them, particularly in how the process is initiated and what happens to the company’s assets and liabilities. Understanding these differences helps business owners choose the right method for closing a company properly and staying compliant with UK law.

What Does Striking Off a Company Mean

Striking off is the formal process of removing a limited company from the Companies House register. Once a company is struck off, it ceases to legally exist.

There are two types of striking off:

  • Voluntary striking off, initiated by the company directors.

  • Compulsory striking off, initiated by Companies House or HMRC.

In both cases, the company’s registration is cancelled, meaning it cannot trade, own property, or carry out any business activity.

Voluntary Striking Off

Voluntary striking off is used when directors choose to close a company that is no longer trading or needed. To qualify, the company must meet certain conditions:

  • It has not traded or sold any stock in the last three months.

  • It has not changed its name in the last three months.

  • It is not facing insolvency proceedings, such as liquidation.

  • It has no outstanding agreements with creditors.

To begin the process, directors must complete Form DS01 and send it to Companies House, along with the £10 filing fee. Copies must also be sent to shareholders, employees, creditors, and HMRC.

If no objections are raised within two months, the company will be struck off and officially dissolved.

Compulsory Striking Off

Compulsory striking off happens when Companies House or HMRC removes a company from the register because it has failed to meet its legal obligations.

Common reasons include:

  • Failure to file annual accounts or confirmation statements.

  • Failure to respond to official correspondence.

  • Evidence that the company is no longer trading.

Before removing the company, Companies House will send warning letters and publish a notice in the Gazette (the UK’s official public record). If the company does not respond, it will be struck off and dissolved automatically.

Compulsory striking off can have serious consequences for directors, including disqualification and personal liability for company debts.

What Does Dissolving a Company Mean

Dissolving a company means the business has been formally closed and removed from the Companies House register. It is the result of the striking off process, not a separate action.

In other words, striking off is the process, and dissolution is the result. Once dissolved, the company no longer exists as a legal entity.

All assets still held by the company at the time of dissolution automatically become the property of the Crown, under a legal principle known as bona vacantia. This includes money in bank accounts, property, and intellectual property rights.

Key Differences Between Dissolving and Striking Off

While the two terms are often used interchangeably, the difference lies in how the company is closed and at what stage.

Comparison Striking Off Dissolution

Definition The process of applying to remove a The end result once the company has been removed

company from the register

Who initiates it Company directors (voluntary) or Automatically occurs after successful striking off

or Companies House (compulsory)

Legal status Company is still active during the process Company no longer exists legally

Control Directors have control in voluntary striking off No control once the company is dissolved

Asset ownership Assets must be distributed before striking off Remaining assets pass to the Crown

under bona vacantia

In short, striking off is the administrative step, and dissolution is the legal conclusion of that process.

What Happens Before Dissolution

Before submitting a striking off application, directors must take several actions to close the company properly. These include:

  • Settling all debts and liabilities.

  • Closing business bank accounts.

  • Distributing remaining assets among shareholders.

  • Cancelling VAT registration and payroll (PAYE).

  • Filing final accounts and tax returns with HMRC.

Failing to complete these steps can cause objections to the striking off or create legal complications later.

What Happens After Dissolution

Once a company is dissolved:

  • It ceases to exist and cannot trade or reopen bank accounts.

  • Its name is removed from the Companies House register.

  • Any remaining assets become Crown property under bona vacantia.

  • Directors lose authority to act on behalf of the company.

If the company needs to be reinstated later (for example, to recover assets or settle a legal matter), an application can be made to restore it to the register within six years of dissolution.

When Striking Off Is Not Appropriate

Striking off is suitable for companies with no outstanding debts or legal disputes. It is not appropriate if the company:

  • Owes money to creditors or HMRC.

  • Is being investigated by regulators.

  • Is subject to insolvency proceedings.

In these cases, the company should go through a voluntary liquidation process instead, where a licensed insolvency practitioner manages the winding-up and distribution of assets.

The Role of HMRC During the Process

HMRC must be notified when a company is applying to strike off. Before dissolution, the company must:

  • File its final Corporation Tax return.

  • Pay any outstanding tax liabilities.

  • Cancel its PAYE scheme and VAT registration.

HMRC may object to the striking off if there are unpaid taxes or compliance issues. Only once HMRC is satisfied will the process proceed without objection.

How an Accountant Can Help

An accountant plays a crucial role in ensuring the company’s closure runs smoothly. They can:

  • Prepare final accounts and Corporation Tax submissions.

  • Calculate and distribute remaining profits to shareholders.

  • Notify HMRC, creditors, and Companies House on your behalf.

  • Ensure all assets are dealt with before dissolution.

  • Advise whether striking off or liquidation is the best route.

Having professional support prevents mistakes and avoids delays or objections during the closure process.

Reinstating a Dissolved Company

If you later need to restore a dissolved company, you can apply for administrative restoration (if you were a director or shareholder) or court restoration in more complex cases.

Restoration may be required if:

  • The company was dissolved in error.

  • Assets were discovered after dissolution.

  • Legal action needs to be taken on behalf of the company.

Once restored, the company regains its previous legal status as though it had never been dissolved.

Summary

The difference between dissolving and striking off a company lies mainly in timing. Striking off is the process used to close and remove a company from the register, while dissolution is the result once that process is complete. Voluntary striking off is ideal for companies that are no longer trading and have no debts, while compulsory striking off occurs when Companies House or HMRC removes inactive companies.

Before starting the process, it is essential to settle all liabilities, inform HMRC, and distribute remaining assets. An accountant can help you manage the closure efficiently, ensuring compliance with Companies House and HMRC while avoiding costly mistakes.