What Is Objection To Striking Off A Company?

This guide is about what is objection to striking off a company.

In this article you’ll learn about:

• Why HMRC Object To A Company Strike Off Application
• What Happens On A Failure To Notify Creditors 
• Action To Take After Objection To Striking Off Application

Overview Of What is an Objection to a Strike off Application

The most common objector to the striking off of companies is likely to be HMRC. But what does it mean when you have obtained a letter mentioning that HMRC is objecting to the striking off a company of which you are a Company Director from the Registrar of Companies.

The first query you will in all likelihood ask is what does this suggest and what can you do?

Well, the answers to your question are detailed below, so keep reading or alternatively give us a call and we will gladly provide you with an explanation over the phone. Alternatively, email us and we can deal with your query. 

Objection to a Striking off Application is when a company owes money to a creditor such as HMRC, such a creditor is entitled to in effect say:

Hey Companies House we do not want this company to be dissolved and struck off; we are owed money and we want to be paid or we want to consider taking alternative action against the Company.

The right to lodge an objection to the striking off arises from Section 1003(3)(b) of the Companies Act 2006:

(3) The registrar may not strike a company off under this section until after the expiration of [F12 months] from the publication by the registrar in the Gazette of a notice—

…

(b)inviting any person to show cause why that should not be done.

Why Would HMRC Object To A Company Strike Off Application?

The reason HMRC would object to a company strike-off application is if they are owed money they want to be paid. However, if a company is insolvent then in all likelihood a creditor such as HMRC will want to know why they are likely not to be paid.

If a company is struck off and dissolved at Companies House then there is no prospect of either being paid or to learn why the company is not making payment. Companies that do not pay HMRC and or other creditors will not do so for a number of reasons:

• Unable to pay
• Do not want to pay typically because the debt is disputed 
• An oversight could have arisen

HMRC typically won’t let a company be struck off at Companies House until or unless it makes the payments due. If HMRC is owed money that goes unpaid it will take action, usually by issuing a Winding Up Petition for the company to be placed into Compulsory Liquidation. This enables an independent Liquidator to investigate and explain why the debt went unpaid and ensure there were no irregularities.

Creditor Objection Process

A creditor can file a notice with Companies House that it objects to the striking off application and seek suspension until it has been paid and this will trigger the receipt of a letter informing you of the objection and suspension.

Normally an objection will last around three months and if no further action is taken by the creditor then the path to dissolution often will restart.

However, Companies House will usually suspend the strike-off application again for a further three months if the creditor maintains their objection. Eventually, if nothing happens then a creditor such as HMRC will want to see some activity otherwise it will then return the company back onto the dissolution pathway.

Failure To Notify Creditors Often Triggers The Strike Off Objection

In order to do a striking off application correctly, you need to fill in a Form DS01.

However, it is a mandatory requirement that upon filing the Form DS01 at Companies House that within 7 days all creditors are notified and given a copy of the striking off application. To safeguard the position of creditors in case you did not send the Form DS01 to one of them for any reason the striking off application is published in the Gazette which is a matter of public record. Many organisations such as HMRC and Banks that are very commonly creditors of insolvent companies will review the Gazette Newspaper routinely (daily in all likelihood) for such notices in order to put themselves in a position to raise objections when required. 

Other than HMRC, in current times it is very common to see Banks who have issued loans under the Bounce Back Loan Support Scheme that have not been repaid to issue objections to striking off applications. Those Banks want to be able to call on the Government’s Guarantee to get their money back for these loans and as such usually will expect such companies to go into Liquidation before they are able to go calling to the Government.

Action After Objection To Striking Off Application To Be Taken?

Paying the debt to HMRC or the creditor is the obvious thing to do if it is possible and then you can continue with the dissolution of the company as originally intended.

In the event of a disputed debt position then you should liaise with the creditor to discuss the same to try to come to a resolution that both parties can live with.

What Does Companies House Say About Objections To Striking Off?

We submitted a FOI request to Companies House via the Freedom of Information Act 2002 about the strike off timescale procedures and if there are alternative approaches adopted if an objection to striking off is received from a government department and the response included the following information:

If an objection is accepted the strike off action will be suspended for 6 months. If no further objection is received,
the strike off action will recommence.

All objections receive a six month hold regardless of whether the objector is another government body or a member of the public.

What To Do With An Insolvency Company?

However, when a company is insolvent and unable to pay, then in most cases where HMRC is concerned and you have received an objection then you can either let HMRC wind up the company or take an alternative responsible course of action to close the company down and seek independent professional advice to consider placing the company into Creditors Voluntary Liquidation so that an orderly process can be arranged for the company. At Oliver Elliot we can and will gladly assist you with this.