Strike-off vs liquidation: when DS01 is a mistake

A voluntary strike-off closes a company that has stopped trading and owes nothing. A company that owes money cannot be struck off, because its creditors object and the application is suspended. Trying anyway leaves the debt in place and adds a conduct problem.

What a DS01 is for

Form DS01 asks Companies House to remove a company from the register. It costs £33 online. It is designed for a company that has not traded or changed its name in the last three months, is not the subject of any insolvency proceedings, and has no outstanding liabilities. The directors sign a declaration to that effect. Companies House publishes the application in the Gazette, and if nobody objects within two months the company is dissolved.

Before applying, the company must have told every creditor, employee, shareholder and HMRC within seven days of the application. That notification is a statutory duty, and it is what triggers the objections.

Why it fails when there are debts

Creditors object. HMRC checks every strike-off notice against its records and objects where any tax, return or enquiry is outstanding. Lenders check for Bounce Back Loan borrowers. Trade creditors who were owed money object when they receive the notice. An objection suspends the application; Companies House will not dissolve the company while a creditor has a live objection, and the objection can be renewed.

The company therefore remains on the register, still owing the money, still accruing interest and penalties, with a published record that the directors tried to dissolve it. The next step is usually a creditor’s winding-up petition, and now the compulsory liquidation starts with the strike-off attempt on the file.

The conduct problem

The declaration on a DS01 that the company has no liabilities is a statement the directors know to be untrue if it has debts. Knowingly making a false statement on the form is an offence. Separately, the Insolvency Service has had the power since 2021 to investigate directors of dissolved companies and bring disqualification proceedings without first restoring the company, specifically to catch strike-offs used to avoid debts, including Bounce Back Loans. It has used that power.

When strike-off is right

The company has stopped trading, every debt has been paid in full, HMRC has been told and has nothing outstanding (final accounts and corporation tax return filed and paid, PAYE scheme closed, VAT deregistered), and any remaining assets have been distributed to shareholders before the application, because anything left in the company at dissolution passes to the Crown. In that case, strike off; it is cheap and correct.

If the company has assets worth more than £25,000 to distribute, a members’ voluntary liquidation is usually more tax-efficient than strike-off, because distributions in an MVL are capital rather than income. That is a solvent liquidation and a different conversation.

When liquidation is right

The company has debts it cannot pay in full. A creditors’ voluntary liquidation deals with all creditors in one lawful process, ends with the company dissolved, and leaves you with no false declaration on the record. For a company with few creditors, no assets and a clean history, fixed-fee practitioners offer CVLs from around £2,000 to £3,000 plus VAT. That is more than £33, and it is the price of closing the company properly.

The decision

Can the company pay every debt in full today, including HMRC? If yes, pay them, distribute what is left, and file the DS01. If no, do not file the DS01. Get a quote for a CVL.

What to do today

1. List every creditor including HMRC, the Bounce Back Loan and any lease.
2. If the total can be paid in full, pay it, then follow the strike-off steps.
3. If it cannot, speak to a licensed insolvency practitioner about a CVL and ask about fixed-fee options.
4. If a DS01 has already been filed with debts outstanding, withdraw it with form DS02 before a creditor objects.