Dissolution Case Study
We were contacted by the wife of the director of a Limited company. He had been advised to cease to trade and ‘walk away’ from the company as the debts were relatively small (below £20,000) and he did not have sufficient funds to liquidate. Unfortunately the director had not notified any of the creditors and although he was now employed and had ‘moved on’ he was being pursued by Bailiffs turning up at his home threatening to seize personal assets.
Typically he had his registered office as his family address and this was causing the visits from the bailiffs. In addition he had received a letter from the HMRC threatening legal action if the £14,000 corporation tax bill was not paid.
The company had ceased to trade several months beforehand and there was no company stock, assets, employees or monies owed in. He had assumed his accountant would notify HMRC – they hadn’t and HMRC were threatening to reinstate the company and backdate any penalties. Whilst this is not common it is not unusual for HMRC.
OVERALL DEBTS TO THE COMPANY: £23,000 – PREVIOUS COMPANY TURNOVER: £176,000 – EMPLOYEES: NONE
Following a telephone conversation and assessment of the situation we suggested that the best course of action was to call and write to the Creditors/HMRC and let them know of the situation. As the company was insolvent we cannot simply close the company without notifying creditors and giving them an opportunity to object. We included commercial advice and contacted the Bailiffs to let them know the situation formally and they stopped any further action. The dissolution was completed in under 6 weeks as the company had already ceased to trade some several months earlier. Whilst not a perfect solution it was the only solution available.