Published: 22nd July 2021
Closing a company with a DS01 form means you voluntarily strike the business from the register at Companies House. It is inexpensive and relatively straightforward, but there are other closure options that may be more appropriate.
Much depends on the financial position of your business as to which closure method is best. Closing your company with a DS01 form is only appropriate if the business is solvent – if it can repay all its creditors, plus interest, within 12 months.
You may believe the company is solvent, but the existence of contingent liabilities can make the situation more complex, and render voluntary strike-off inappropriate. This is why professional guidance is invaluable.
Begbies Traynor Group is the UK’s leading independent business recovery specialist, and can provide tailored, reliable professional advice on company closure.
A DS01 form is used to voluntarily dissolve a limited company. It is sent to Companies House, and if accepted, results in strike off from the Register of Companies. Prior to sending form DS01, the company needs to meet certain eligibility criteria:
You can close your company with a DS01 form, and with no specialist input, but it is highly advisable to seek professional confirmation that the business is solvent before proceeding.
The form for voluntary strike-off can be obtained from Companies House and completed by hand, or you can carry out the process online. Once you have made the application you should send a copy to any directors who have not signed the form, and to all shareholders, creditors, and employees.
Companies House places a notice in the Gazette, so that creditors can object to the strike-off if they are owed money by the company. If a creditor claims a legitimate debt, the business can be reinstated to the register.
This is one of the reasons why closing a company with a DS01 form is not always appropriate - you could be accused of misconduct if you attempt to close your business down when it owes money.
Two formal closure methods also exist:
These procedures require the appointment of a licensed insolvency practitioner (IP) who ensures your statutory duties are fully met, and that the company is closed down in an orderly manner.
You could unknowingly owe money to a creditor
Creditors can come forward to make a claim when the application is being administered, or after the company has been struck off. The process will be suspended if a claim is made, and you may need to enter Creditors’ Voluntary Liquidation if the business becomes insolvent.
You may face misconduct allegations if legitimate creditors exist
As we mentioned earlier, the company is reinstated to the register if Companies House determine that a creditor claim is legitimate. This can ultimately lead to accusations of misconduct if it is believed you attempted to close your business knowing that it was insolvent.
It is an inexpensive closure method, but not necessarily appropriate
This low cost method of closing a company is attractive, but the situation can be more complex than initially thought in some instances. Contingent liabilities sometimes arise, which make your company insolvent. Contingent liabilities can result from claims made against the company by employees, for example, or related to product liability.
Seek professional insolvency advice before proceeding
If your company is insolvent and you enter CVL, you may be entitled to claim director redundancy pay and other statutory entitlements. This can represent a significant sum, with the current average claim for director redundancy being £9,000.
Our partner-led team of licensed insolvency practitioners can provide trustworthy, unbiased advice on whether to close your company with a DS01 form, and also on claiming director redundancy. We offer free, same-day consultations, and operate a broad network of offices around the UK.