Insolvent trading?

My client is sufferring in the current economic climate.

The good news is that they are continuing to get orders, their customers are paying on time and they are only a couple of months behind paying trade creditors. The P&L shows a small profit. However, they owe HMRC re PAYE, VAT & Corporation tax. They had a payment plan in place and were keeping up with the payments until last September. They have only made minimal payments since then.

They are in the process of trying to sell their house and will use some of the funds to repay the HMRC debt (they have a substantial amount of equity in the house).

Could they be prosecuted for wrongful trading as the company doesn't have the money to pay HMRC? Would the fact that the directors are trying to raise the money to pay the debt be sufficient to say that the company is a going concern? The bank is supporting them and has recently given them a loan, with personal guarantees from the directors.

Should they speak to an IP? They want to avoid incurring these costs if they can avoid it.

 

 

 

Comments
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Wrongful trading

davidwinch |
davidwinch's picture

Not fraudulent

cawas |

Possibly

davidwinch |
davidwinch's picture

I am an IP and would be happy to advise.

Stephen Powell |