What Is a First Gazette Notice for Compulsory Strike-Off?
A first Gazette notice for compulsory strike-off advertises the imminent compulsory closure of a business to any potentially interested parties. This can include creditors, shareholders, and employees.
So what are the reasons for a compulsory strike-off? What are the risks? And what can you do about a first Gazette notice?
Contents
Why Might a Company Be Forcibly Struck Off?
- Failing to file company accounts on time
- Failing to file your annual confirmation statement (CS01)
- Not updating changes to your registered office address
- Failing to appoint a company director
- Failing to correspond with Companies House
- Not actively trading as a business
When Companies House begins the strike-off process, they’ll send your business two letters of warning over the course of two months. If you don’t respond to these letters, they’ll post a first Gazette notice, giving interested parties two months’ notice to object to the company being removed from the register.
If no action is taken, the company will be removed from the register and will cease to exist. A second Gazette notice is then placed which advertises its closure.
What Happens to a Company After a First Gazette Notice?
A strike-off notice will have no effect on the day-to-day running of the business when posted to the Gazette, although it may spur company creditors into action.
However, when your business is removed from the register, it will no longer exist, which means that you will no longer have the protection of limited liability when making trades. It also means you may violate your fiduciary duty as a director, potentially landing you in legal hot water.
It’s important to keep up with the requirements of Companies House – especially when it comes to updating your registered business address. If your business address is out of date, Companies House may send strike-off warnings to the wrong address, which could result in your business being struck off without your knowledge, leaving you exposed.
What Are the Risks of Compulsory Company Strike-Off?
Your Assets May Be Assumed by the Crown
When a company is struck off the register, it ceases to exist as a legal entity – this means that any assets registered as belonging to the company will be left without an owner. These are known ‘bona vacantia’ or ‘vacant goods’.
In the UK, ownership of any vacant goods is automatically transferred to the Crown at the point of dissolution. The only way to regain ownership of the assets at this point would be to restore the company, which will carry some court fees.
You Could Face Legal Charges
If your company has outstanding debts to creditors, you have a fiduciary duty to act in their best interests. When a company is struck off, creditors are left unable to reclaim what is rightfully theirs, meaning you have failed to uphold this duty.
Creditors – such as HMRC – may then look to reinstate your company and force it into liquidation, allowing them to reclaim their money. The compulsory liquidation process will open up an investigation into your conduct as a director, which may leave you facing accusations of misfeasance, wrongful trading, and fraudulent trading.
These charges carry a range of penalties:
- Disqualification from future directorship
- Being made personally liable for company debts
- Receiving large fines
- Imprisonment for up to 10 years
Loss of Limited Liability
When you trade as a business, you’re given the protection of limited liability. This means you cannot be held personally responsible for company debts.
However, when your company is struck off, you lose this protection – as a result, any debts you pick up while trading will be yours to deal with. If you can’t repay these debts, you may be forced to declare bankruptcy, resulting in the loss of your personal assets.
What Can You Do if Your Business Receives a First Gazette Notice?
There are a few different ways to remove a first Gazette notice and stop the strike-off process against your business. The answer depends on the reason for the notice being posted in the first place; you can find this by referring to the letters of warning issued by Companies House, which will outline what you need to do.
Typical actions include:
- Filing overdue accounts and returns
- Resuming trading or registering the company as dormant
- Updating your registered office address
- Responding to Companies Registrar enquiries
If the company is simply inactive and no longer trades, you can just let the process take its course. However, if the business owes any debts you should instead pursue voluntary liquidation to avoid any potential legal or financial fallout.
If the company has already been struck off, you can seek to have it restored.
What Can I Do if My Business Has Debts?
If you’re struggling with corporate debt, it’s important you take the initiative and speak to an insolvency practitioner as soon as possible. Allowing your company to be wound up by outside forces may be seen as a failure to uphold your duties as a director, inviting further problems down the line.
Our team can assist you with a voluntary liquidation, safeguarding your interests and writing off company debts. In some cases, a recovery option might be suitable, allowing you to return your business to profitability with a CVA or administration.
Get in touch today to book a free consultation today.
