Section 1003 Strike-off
Under S.1003 Companies Act 2006, directors are entitled to request that a company be struck off if it has ceased trading, even if it is insolvent. It can be a cost-effective way of dealing with a small company where the costs of liquidation are prohibitive. The company has to have ceased trading for three months and have no assets. There are statutory forms to complete and known creditors receive notice and can object. HMRC may object if it is owed money or it believes directors have overdrawn directors loan accounts or if dividends have been paid to the detriment of creditors. The process is straightforward, although best managed by an insolvency practitioner, since there can be pitfalls. As of 1 March 2012 it is likely that the ESC 16 concession will be replaced by a statutory instrument governing the limits allowed to be distributed on company dissolutions which means that the Members Voluntary Liquidation (MVL) route is probably the most tax efficient method of shareholders withdrawing funds rather than using the Strike-Off process.
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