The answers already given cover off the majority of things and, as ever, the devil is always in the detail.
The point that occurs to me which has been made but not yet given a name, is the rights of subrogation - standing in the shoes of the creditor(s) being paid - in the event that anything does, in the future, come out of the Administration or subsequent Liquidation.
This would apply where a guarantor were required to pay as J&S liable too - they can claim - but what can they claim? If they only paid what they could afford and that wasn't all of the debt due to that creditor - does the creditor rank for their shortfall first and then anything over that flows to the person paying (whether as PG provider or just for commercial reality reasons...).
A lot of detail and quite a few devils in there - circumstances will vary from case to case. Always worth talking to an IP you know like and trust.
Whilst I'm an accountant who has never traded as such, having already moved over to the dark side and become an IP, I thought it worth just mentioning Directors and Officers ("D&O") Insurance which I have often suggested might be better paid personally and claimed back.
The reason for this being that the chances are, when you may be in need of D&O cover, is when things are starting to go wrong and maybe the Company bank account/credit card is not making the payments without you necessarily becoming aware.
Better to be out of pocket for a few premiums than be left without cover just when it is needed.
I'd be happy to talk through the options as I see them - [email protected] if you want to get in touch. The information given isn't enough to advise on though and so more info is required - suffice to say you want what is best for you and the creditors and not simply another fee for the insolvency professionals when there appears to be nothing in it for them.
Keep notes of what you are doing and why (helpful having contemporaneous notes lest mud should be flung in the future) - your actions now should all be with a view to minimising losses to creditors.
Good luck!
Peter
Sad but true, whether by design or otherwise.
That said, I was put in funds to review a matter a previous IP had sought to close, with over £200k unpaid on their clock, and managed to recover a 7 figure sum from the director for the benefit of creditors.
A rare beast but they do walk amongst us.
As an ACCA member and an Insolvency Practitioner I can agree with many of the previous comments. The ACCA guidance is to be found at
Home /Technical activities and advice/Technical resources/2010/October/Illegal dividends
If not a member this should still be available via the ACCA Global website.
Talking to an IP (whether me or a plc) won't add much to the equation at this stage, I'd say, however, I would agree that if this goes awry later someone like me will be knocking on doors and asking for the illegal dividends to be repaid - doesn't mean that they will be successful though!
Bon chance!
From 1 April 2004, most people have received an automatic discharge from bankruptcy after 12 months. There is no letter/certificate but, for a fee, one can be obtained.
Anyone having a second Bankruptcy Order made against them after 1 April 2004, may be subject to a Bankruptcy Restriction Order (or Agreement)(BRO or BRA). If you are subject to a BRO/A then you will still get your discharge but the disabilities of bankruptcy will remain for the period of the BRO/A (up to 15 years).
If the debtor doesn't cooperate with the Official Receiver/Trustee (if appointed) then the discharge can be suspended until they do cooperate. This could be for an indeterminate period.
Agree with the point re visable for 6 years following discharge 'though the Government Website showing all B'cies and IVA take them off 3 month after discharge/completion. Also, if asked the question in a credit application "have you ever been subject to a Bankruptcy Order/IVA etc" the answer will always be "yes" irrespective of how long after...
Sorry if this is all getting a bit too detailed and off the initial tax question point.
I don't know if I'm able to refer to an article elsewhere but, if I am, look at https://www.taxation.co.uk/Articles/2018/05/08/337961/unexpected-liabili... and you will see that HMRC might treat this DLA as income in the circumstances.
If you get tax clearance beforehand I guess estopel would apply but I'd be concerned at the potential loss of Entrepreneurs Relief, albeit in this case the majority of funds would be within the annual allowance figure any way....
As the immediate past chairman I can confirm that the exams themselves shouldn't "expire" though showing that you've kept up to date with things post exams is likely to be an issue with whoever the proposed RPB may be.
Even if you are not planning to take appointments you can become licensed as a non-appointment taker if you wished.
Congratulations on passing and good luck with your future career.
HMRC are certainly the people most likely to object to any striking off - they often do this where they are concerned that there may be issues requiring investigation. This is much more straightforward pre strike-off than post.
If you can ease their troubled minds then I would agree you should do so.
With a number of companies being described as Zombies, and yet more being simply unused, there will doubtless be an increasing number of directors availing themselves of the simple and cheap striking-off procedure. They may use this where there has either been no trade or where trading has ceased and there are no/insufficient assets to pay for a formal process and no creditor wants to pay to wind things up formally (voluntarily or compulsorily). Directors, who are in this position, may sometimes be encouraged by insolvency practitioners to underwrite the costs of a formal, most likely voluntary, process personally - I would encourage most to have short arms and deep pockets on these occassions. Especially where they have guaranteed liabilities and their scarce resources will be required to satisfy these.
Generally where there is a tax liability HMRC can be relied upon to put the matter to bed through a formal insolvency by petitioning to wind up companies / bankrupt individuals - it remains the case that a petition can be issued for a debt, or debts over £750 (although this limit is currently under review as it has not changes for some decades now!).
As a responsible director you should do what you can to dot i's and cross t's; hopefully only a few stamps will be required and in doing this you are covering your own backside with Teflon (R)!
I can't imagine I could have caused offence with the above and certainly didn't mean to. In esence - better to tell too many than too few.
Given the numbers, and that what the directors are looking for is best advice for themselves, not simply another job for the (currently short of work) insolvency profession... an informal full & final may be possible (need 100% to agree) failing which invite creditors to wind up, wind up compulsorily themselves (say £2,300 + VAT typically) or, if you really want to keep me and my kind in fast cars and loose women, CVL or CVA with all the bells and whistles...
A formal route may be better if there are employee claims to be dealt with. Given the duration of trading and the numbers it would seem unlikely that Wrongful Trading would be taken up especially as, on the face of this, they appear to be endeavouring to take every step possible to minimise losses to creditors...
A common distinction between Voluntary and Compulsory liquidation (especially from IPs after work) is that the job of the OR is to prosecute and disqualify etc. etc. that you are comparing BUPA (Voluntary) with NHS (Compulsory) - and who wouldn't choose BUPA... As ever you have to ask yourself who is giving the advice and what is in it for them.
Keep notes of what doing and why - contemporaneous notes - some defence against future accusations of wrong-doing. We always have the benefit of 20:20 vision with hindsight.
My answers
The answers already given cover off the majority of things and, as ever, the devil is always in the detail.
The point that occurs to me which has been made but not yet given a name, is the rights of subrogation - standing in the shoes of the creditor(s) being paid - in the event that anything does, in the future, come out of the Administration or subsequent Liquidation.
This would apply where a guarantor were required to pay as J&S liable too - they can claim - but what can they claim? If they only paid what they could afford and that wasn't all of the debt due to that creditor - does the creditor rank for their shortfall first and then anything over that flows to the person paying (whether as PG provider or just for commercial reality reasons...).
A lot of detail and quite a few devils in there - circumstances will vary from case to case. Always worth talking to an IP you know like and trust.
Whilst I'm an accountant who has never traded as such, having already moved over to the dark side and become an IP, I thought it worth just mentioning Directors and Officers ("D&O") Insurance which I have often suggested might be better paid personally and claimed back.
The reason for this being that the chances are, when you may be in need of D&O cover, is when things are starting to go wrong and maybe the Company bank account/credit card is not making the payments without you necessarily becoming aware.
Better to be out of pocket for a few premiums than be left without cover just when it is needed.
I'd be happy to talk through the options as I see them - [email protected] if you want to get in touch. The information given isn't enough to advise on though and so more info is required - suffice to say you want what is best for you and the creditors and not simply another fee for the insolvency professionals when there appears to be nothing in it for them.
Keep notes of what you are doing and why (helpful having contemporaneous notes lest mud should be flung in the future) - your actions now should all be with a view to minimising losses to creditors.
Good luck!
Peter
Sad but true, whether by design or otherwise.
That said, I was put in funds to review a matter a previous IP had sought to close, with over £200k unpaid on their clock, and managed to recover a 7 figure sum from the director for the benefit of creditors.
A rare beast but they do walk amongst us.
As an ACCA member and an Insolvency Practitioner I can agree with many of the previous comments. The ACCA guidance is to be found at
Home /Technical activities and advice/Technical resources/2010/October/Illegal dividends
If not a member this should still be available via the ACCA Global website.
Talking to an IP (whether me or a plc) won't add much to the equation at this stage, I'd say, however, I would agree that if this goes awry later someone like me will be knocking on doors and asking for the illegal dividends to be repaid - doesn't mean that they will be successful though!
Bon chance!
From 1 April 2004, most people have received an automatic discharge from bankruptcy after 12 months. There is no letter/certificate but, for a fee, one can be obtained.
Anyone having a second Bankruptcy Order made against them after 1 April 2004, may be subject to a Bankruptcy Restriction Order (or Agreement)(BRO or BRA). If you are subject to a BRO/A then you will still get your discharge but the disabilities of bankruptcy will remain for the period of the BRO/A (up to 15 years).
If the debtor doesn't cooperate with the Official Receiver/Trustee (if appointed) then the discharge can be suspended until they do cooperate. This could be for an indeterminate period.
Agree with the point re visable for 6 years following discharge 'though the Government Website showing all B'cies and IVA take them off 3 month after discharge/completion. Also, if asked the question in a credit application "have you ever been subject to a Bankruptcy Order/IVA etc" the answer will always be "yes" irrespective of how long after...
Sorry if this is all getting a bit too detailed and off the initial tax question point.
I don't know if I'm able to refer to an article elsewhere but, if I am, look at https://www.taxation.co.uk/Articles/2018/05/08/337961/unexpected-liabili... and you will see that HMRC might treat this DLA as income in the circumstances.
If you get tax clearance beforehand I guess estopel would apply but I'd be concerned at the potential loss of Entrepreneurs Relief, albeit in this case the majority of funds would be within the annual allowance figure any way....
Best Before...
As the immediate past chairman I can confirm that the exams themselves shouldn't "expire" though showing that you've kept up to date with things post exams is likely to be an issue with whoever the proposed RPB may be.
Even if you are not planning to take appointments you can become licensed as a non-appointment taker if you wished.
Congratulations on passing and good luck with your future career.
Peter
If anyone is going to object...
HMRC are certainly the people most likely to object to any striking off - they often do this where they are concerned that there may be issues requiring investigation. This is much more straightforward pre strike-off than post.
If you can ease their troubled minds then I would agree you should do so.
With a number of companies being described as Zombies, and yet more being simply unused, there will doubtless be an increasing number of directors availing themselves of the simple and cheap striking-off procedure. They may use this where there has either been no trade or where trading has ceased and there are no/insufficient assets to pay for a formal process and no creditor wants to pay to wind things up formally (voluntarily or compulsorily). Directors, who are in this position, may sometimes be encouraged by insolvency practitioners to underwrite the costs of a formal, most likely voluntary, process personally - I would encourage most to have short arms and deep pockets on these occassions. Especially where they have guaranteed liabilities and their scarce resources will be required to satisfy these.
Generally where there is a tax liability HMRC can be relied upon to put the matter to bed through a formal insolvency by petitioning to wind up companies / bankrupt individuals - it remains the case that a petition can be issued for a debt, or debts over £750 (although this limit is currently under review as it has not changes for some decades now!).
As a responsible director you should do what you can to dot i's and cross t's; hopefully only a few stamps will be required and in doing this you are covering your own backside with Teflon (R)!
I can't imagine I could have caused offence with the above and certainly didn't mean to. In esence - better to tell too many than too few.
Peter
Best Advice
Given the numbers, and that what the directors are looking for is best advice for themselves, not simply another job for the (currently short of work) insolvency profession... an informal full & final may be possible (need 100% to agree) failing which invite creditors to wind up, wind up compulsorily themselves (say £2,300 + VAT typically) or, if you really want to keep me and my kind in fast cars and loose women, CVL or CVA with all the bells and whistles...
A formal route may be better if there are employee claims to be dealt with. Given the duration of trading and the numbers it would seem unlikely that Wrongful Trading would be taken up especially as, on the face of this, they appear to be endeavouring to take every step possible to minimise losses to creditors...
A common distinction between Voluntary and Compulsory liquidation (especially from IPs after work) is that the job of the OR is to prosecute and disqualify etc. etc. that you are comparing BUPA (Voluntary) with NHS (Compulsory) - and who wouldn't choose BUPA... As ever you have to ask yourself who is giving the advice and what is in it for them.
Keep notes of what doing and why - contemporaneous notes - some defence against future accusations of wrong-doing. We always have the benefit of 20:20 vision with hindsight.
Good luck!