Time to Pay and Creditor Voluntary Liquidation
The company, providing building subcontracting services to major companies in London, had gotten itself into financial difficulty due to one of the director’s protracted illness which caused a backlog of un-chased invoices. At the same time the HMRC were chasing the company for around £98,000 in CIS payments, £45,000 for VAT and £36,000 for Corporation Tax. The late payments on the invoices caused a significant cash-flow problem to the company which had up until now traded well with an excellent credit rating.
Prompted by their accountant they contacted Company Debt and we advised them not to enter into an agreement with HMRC as any agreement needs to be handled professionally. The director decided he wanted to carry on against our advice and agreed a payment plan with HMRC. Two months later we were contacted again after HMRC had used a Distraint Warrant against the works vehicles and were threatening a Winding Up Order at the High Court in London due to a delayed payment.
OVERALL DEBTS TO THE COMPANY: £163,000 – COMPANY TURNOVER: £583,000 – 2 EMPLOYEES
Being familiar with the case we took control and within five days had a plan to close the existing company and start up a new company in a different name. We knew from experience that HMRC would not agree to take payments that the company could afford and would demand the full amount should a default take place. We negotiated a payment with HMRC and had the Distraint Warrant lifted from the vans. We used a Creditors’ Voluntary Liquidation to close the company quickly and the new company bought one of the vans for the new company to start again.
The new company went on to trade with its existing clients successfully as we changed the invoicing process too.
We closed the company and started a new one allowing it to go forward unencumbered with any of the historic debts.