Once the liquidator has been appointed, the company’s bank accounts are secured and he or she decides whether an inspection of the business premises is required.
If the company appears to be trading or the business premises and/or its assets need to be secured, the official receiver and his or her staff will conduct the inspection.
When they have the cooperation of the directors, the official receiver and staff will gather the employees in the presence of the directors and tell them that the company has been forced into liquidation because it is insolvent and that as a direct result the company must cease trading. This announcement may come out of the blue for some members of staff.
The official receiver and his or her staff will give employees redundancy notices as well as P45 forms. Employees are also advised that they may be able to claim redundancy payments in line with the Employment Rights Act 1996. The official receiver or his or her staff will give out copies of the booklet “Redundancy and Insolvency – A guide for Employees”. The names and addresses of all employees will be recorded and the official receiver will subsequently send letters to staff explaining their rights. The list of names may be recorded on the schedule of employees, which forms part of the inspection report or any written addition report produced by the inspecting officer. During the inspection, all PAYE and personnel files are seized and taken back to the official receiver’s office for security.
All the company’s trading books, records and other documents of title, chequebooks, bank cards and correspondence are listed and their location noted before being seized and removed from the premises. The official receiver and his or her staff check the accounting records available for any undisclosed bank accounts. Recent account statements are checked for any large transactions so that action can be taken to trace the funds. If the accounting records are not at the business premises, the inspecting officer will get details of their whereabouts and take immediate steps for them to be secured.
When a company is liquidated, staff are dismissed with immediate effect and must be given a P45. This form shows employees how much tax they have paid on their salary so far in the tax year. Payroll software, including HMRC Basic PAYE Tools is used to produce the P45 forms or the official receiver may order the forms directly from HMRC if the payroll software is unable to produce them. The P45 contains copies for the leaving employee and their new employer and can be downloaded as a PDF.
If your company has been served with a winding-up order and you would like to know more about the liquidation process, please call 08000 746 757 or email [email protected] for free and confidential advice from one of our professional advisers.