I have a client who has had to close down his previous business due to cashflow issues from the loss of a major customer last year and also a change to payment terms from another customer. The business could trade profitably now, but the previous debts are not servicable (HMRC would not negotiate much with payment plans) and the client has exhausted their personal funds. The amount owing to HMRC was approximately £80K.
The client has set up a new business and purchased the trade and assets, transfered the employees etc from the liquidators and is starting again. A common scenario for many I'm sure. So following the VAT registration, the client has been asked to provide a bond of circa £40K. This is simply not affordable for the client.
Has anyone been in this situation and managed to reverse the decision via a letter of explanation and recent management accounts .
Thanks in advance.
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Requirement for Security
this is a common scenario. Do challenge the imposition of the bond, using Management Accounts, Business Plan, cash Flow Forecast, etc. Explain why NewCo is stronger than OldCo, and why you would expect the business to succeed, and to pay its way. You can argue against the bond; but you can also challenge the quantum, to something affordable, which may still satisfy HMRC.
VAT performance bond
Thanks for the reply. I hope they will consider the above, but I don't hold out much hope...