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  string(4737) "According to figures released by The Insolvency Service, 300 companies went into Administration in the last quarter of 2017.

Jason Elliott of Bolton Insolvency Experts explains what company Administration is and some pros and cons of the procedure.

Company Administration is a formal procedure, whereby, an insolvency practitioner (IP) is appointed to act as the administrator of an insolvent company with the aim of effecting a recovery.

There are advantages and disadvantages to be considered.

The advantages of going into Administration:

• Administration provides a moratorium preventing creditors from taking any further action immediately. This provides necessary breathing space to deal with the company’s affairs. Whilst creditors can seek permission from the administrator or the court to continue with their enforcement, this is usually declined if it would prevent the administrator from achieving the purpose of the Administration.

• Administration puts the company in the hands of a licensed IP acting as the administrator. This ensures that all actions taken during Administration are carried out with the interest of the company and its creditors in mind. As it is linked into the very purpose of Administration, the total funds realised in an Administration will usually be greater than in Liquidation. This is due to either the continuity of trade or a pre-packaged sale preserving the value of the assets.

• The continuity of the business can be protected using the Administration procedure. The process can be used to discard historic debt which is otherwise holding back a credible business and get rid of contracts which have become onerous. The additional advantage of the pre-pack route is that it allows a seamless transition without any interruption in options. Also by using the pre-pack pool and providing viability statements you can lend additional credence to the procedure.

• During the procedure the administrator can propose a company voluntary arrangement (CVA). Following on from the moratorium, one of the possible exits routes from Administration can be to propose a CVA. This can be done outside of the Administration procedure, although creditors can still take enforcement action. A small business moratorium is not attractive therefore if breathing space is required. Proposing a voluntary arrangement through the Administration route is generally the preferred option.

The disadvantages of going into Administration:

• During Administration, directors are no longer in control of the affairs of the company. From the point that the notice of appointment is filed in court, they immediately lose all control of the company to the administrator, even if the intention is to propose a CVA. This can be daunting if the proposed arrangement is rejected and it becomes necessary for the administrator to seek to sell the business. Directors will still have a chance to bid for the business, but no input into the sale process.

• The Administration becomes a matter of public knowledge because correspondence with all creditors and clients must include a note that specifies the company is "in Administration" next to the company name. This could cause uncertainty with customers and directors will need to rebuild relationships to demonstrate they can still provide the same service they are accustomed to, or better.

• As with liquidation, the administrator is obliged to examine and report on the actions of the directors of the company. This can result in disqualification as a director, or having to repay monies to the company which have been handled improperly. It goes without saying that if you have acted properly as a director this will not be an issue that will affect you.

• The cost of Administration can be quite excessive. Unless you have decent cashflow and are being threatened by aggressive creditor action you might wish to avoid it.

• Whilst you are may be able to shed a number of onerous contracts through the Administration process, you will not be able to effect large staffing changes, particularly by way of a pre-pack. TUPE will likely apply to any sale through Administration, preserving employees’ rights. The new company can even become liable for employees’ entitlements even if they are made redundant prior to any transfer. This can create a problem if the budget of the new company cannot afford to cover the payroll of the original company.

Whatever worries you have about your financially distressed company contact our team at Bolton Insolvency Experts now on 0300 303 8284 or via our contact us page."
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What are the advantages and disadvantages of Administration?

Jason Elliott - May 29, 2018

According to figures released by The Insolvency Service, 300 companies went into Administration in the last quarter of 2017. Jason Elliott of Bolton Insolvency Experts explains what company Administration is and some pros and cons of the procedure. Company Administration is a formal procedure, whereby, an insolvency practitioner (IP) is appointed to act as the […]

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  string(3478) "If you are struggling to pay your debts, it helps to know which ones should take priority and which can be dealt with later. Ben Cowgill from Bolton Insolvency Experts explains further.

Some creditors have more power than others to recover debt, and can do so without going to court. Ben outlines the main priority and non-priority business debts, to help you focus attention where it’s most required.

Priority business debts
  • Business rates have been very high in recent years. However, you can appeal against the ‘rateable value’ assigned to your premises. Reliefs are available for qualifying businesses, sometimes up to 100%.
  • Keep up to date with your gas and electricity payments. If you fall behind on energy payments, your provider can cut off supplies to your premises quickly, but they must give you advanced notice. Energy suppliers are usually open to negotiations, and could offer you an extended payment plan.
  • If you have arrears for water bills, it’s a good idea to pay your latest bill and then begin to tackle the arrears if possible.
  • Business mortgage lenders and landlords have the right to take action without a court order. Business premises could be repossessed, or equipment and or stock removed, so it’s important to keep communications open with your lender or landlord.
  • HMRC can take action without a court order, so if you are not able to meet a deadline, contact them. You are likely to be able to negotiate a Time to Pay arrangement for your HMRC liabilities.
  • If you voluntarily return an asset and end the lease or hire purchase agreement, you’ll remain liable for up to half of the original amount. Once the item has been returned, the remaining debt then becomes non-priority.
  • Should one of your suppliers be the only company who can provide certain items, you’ll probably want to regard them as a priority creditor in order to protect your own ability to trade.
  • Bank loans secured on an asset should be treated as a priority debt. Unsecured loans are generally non-priority, unless you fear the bank will restrict your company accounts.
  • Any form of borrowing with a personal guarantee is a priority debt. Your lender could call in the guarantee if loan repayments fall behind, and they see no realistic prospect of payment.
Non-priority business debts The consequences of failing to pay non-priority debts are less severe:
  • Business credit cards and overdrafts generally fall into the category of unsecured loans, and are classed as non-priority.
  • Non-essential business supplies could include office stationery, computer accessories, or accounts with suppliers of cleaning products, for example.
  • Some bank and building society loans not secured on an asset or by personal guarantee are generally considered a non-priority debt.
  • The credit agreement for charge cards such as American Express, differs from a standard credit card. You could find that the provider is not willing to negotiate with you for extended terms.
At Bolton Insolvency Experts, our main goal is to rescue your business but sometimes that is not possible. Our experienced team are available now on 0300 303 8284 or via our contact us page for honest and confidential advice." ["post_title"]=> string(93) "Struggling to pay business debts – understand which are priority and which are non-priority" ["post_excerpt"]=> string(0) "" ["post_status"]=> string(7) "publish" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(4) "open" ["post_password"]=> string(0) "" ["post_name"]=> string(62) "struggling-pay-business-debts-understand-priority-non-priority" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2018-05-25 15:11:08" ["post_modified_gmt"]=> string(19) "2018-05-25 15:11:08" ["post_content_filtered"]=> string(0) "" ["post_parent"]=> int(0) ["guid"]=> string(45) "http://www.theinsolvencyexperts.co.uk/?p=3561" ["menu_order"]=> int(0) ["post_type"]=> string(4) "post" ["post_mime_type"]=> string(0) "" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" }

Struggling to pay business debts – understand which are priority and which are non-priority

Ben Cowgill - May 15, 2018

If you are struggling to pay your debts, it helps to know which ones should take priority and which can be dealt with later. Ben Cowgill from Bolton Insolvency Experts explains further. Some creditors have more power than others to recover debt, and can do so without going to court. Ben outlines the main priority […]

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  string(2447) "Signs of underperformance can be difficult to spot unless there is a sudden and catastrophic disaster. This could be an unexpected loss of key staff, a new competitor with a better or cheaper product or the loss of a key customer as just a few examples. It is quite possible for a business to trade apparently successfully while things go wrong under the surface. Ben Cowgill at Bolton Insolvency Experts explains why it is extremely important for directors to be aware of early signs of underperformance and act on them accordingly and why an insolvency practitioner (IP) could help.

Owners and managers must keep an eye on the key success metrics they have identified. Early signs of a problem may include a lower than expected bank balance, increased use of an overdraft or reduced profit margins. These indicate that costs of production or overheads are increasing faster than revenues. Whilst it may be possible to manage this for a short time, if the business is unaware it will be unsustainable in the long run.

If inflation forces up costs or exchange rates move to make components more expensive, action will almost undoubtedly be needed in order to maintain margins.

Companies with significant amounts of debt should also keep a watch on interest rates especially as they are predicted to rise. This is especially true now businesses have got used to low interest rates. Recent research shows that 80,000 businesses think they would be unable to service debts after even a small interest rate rise which is double the number who said the same thing six months earlier.

The best advice is to always ask yourself difficult questions where your business is concerned and always act immediately if you recognise signs of financial distress in your company. If problems are identified early, you can act. It’s not always easy though but getting support from an IP is far better than burying your head in the sand and waiting until things get worse. Liquidity or cash flow problems rarely fix themselves. Finding the cause is essential, as is understanding differences between a symptom and root cause.

This is one way a licensed IP, or other trusted adviser, can help.

If your company is unable to keep up with financial obligations and you are concerned about your company, contact Bolton Insolvency Experts now on 0300 303 8284 or or via our contact us page."
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Look out for early signs of underperformance

Ben Cowgill - May 3, 2018

Signs of underperformance can be difficult to spot unless there is a sudden and catastrophic disaster. This could be an unexpected loss of key staff, a new competitor with a better or cheaper product or the loss of a key customer as just a few examples. It is quite possible for a business to trade […]

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  string(2143) "Over the course of the last year the number of winding up petitions sought by HMRC has increased by 21%. In fact they are at 5 year high.  Ben Cowgill from Bolton Insolvency Experts gives more detail.

The business finance website Funding Options assessed that there were a total of 4,710 winding up petitions filed by the UK’s main tax-gathering body in the 12 months to 31 December 2017. This compares with 3,906 for the previous year and 3,485 for 2015, with winding up petitions being the means through which HMRC aims to put companies out of business in order to recover tax amounts it is owed.

Winding up petitions can swiftly lead to companies being shut down and their assets liquidated on the basis of court orders enabling HMRC to raise funds to settle outstanding debts.

The recent increases in the number of winding up petitions being filed by HMRC are seen as an indication that a growing number of small businesses across the UK are struggling to meet their VAT and corporation tax bills.

A significant cause of this rising inability among small businesses to settle their tax debts is the problem of endemic late payments by bigger customers.

Because VAT is calculated and billed on the basis of amounts that businesses invoice customers, rather when they are paid, there is scope for significant, damaging shortfalls when invoices go unpaid for long periods.

Another potential problem for some small businesses is that they are now no longer permitted to make payments to HMRC by credit card, payment by which has sometimes provided them with useful breathing space.

If your businesses is behind on its tax bills then it is probable that it will already be on HMRC's radar. We can help you explore finance options for your business before HMRC comes knocking on your door. 

Whatever worries you have about your financially distressed company contact our team at Bolton Insolvency Experts now on 0300 303 8284 or via our contact us page.
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HMRC Winding Up Petition Rates at a 5 year High

Ben Cowgill - April 6, 2018

Over the course of the last year the number of winding up petitions sought by HMRC has increased by 21%. In fact they are at 5 year high. Ben Cowgill from Bolton Insolvency Experts gives more detail. The business finance website Funding Options assessed that there were a total of 4,710 winding up petitions filed […]

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  string(3269) "Enforcement officers, also known as bailiffs can be appointed by a creditor to recover the money which is owed to them. Nick Brierley at Bolton Insolvency Experts explains your rights and what legal powers a Bailiff wields.

If the business is not able to pay the debt in full, then the bailiff is entitled to take control of goods to sell in order to recover the money for the creditor. However, they must have the correct authorisation, for example a Writ of Control or a Warrant of Execution. The bailiff is allowed to take control of items which will raise enough money to cover the debt and any interest, plus the bailiff’s fees. The items will usually be sold at auction.

The bailiff may not take your goods away at the first visit. Their job is to ensure you pay your debt. It’s far easier for them if you simply settle the debt, whether that be in full or in instalments, rather than them taking your goods and them having to sell them. On a first visit, they may inspect your home or premises and draw up a list of assets that they believe at auction will cover the value of the debt. They can also include items that are outside your home or work premises which belong to you or the business. The items on this list will then become controlled goods, meaning you can’t sell them, remove them or give them away. Rather than taking the controlled goods away, the bailiff may secure them at your property or you may be able to carry on using them whilst you pay off the debt under a Controlled Goods Agreement. But, if you miss any payments, they can come back and remove those goods. 

There are regulations governing what a bailiff can and cannot take from your home or work place. For sole traders, business debts are treated the same as personal debts. From your home, bailiffs can take any items that belong to you, any jointly-owned items, cash, cheques, or other monetary items you may have. They are prevented from taking any items which are leased or on hire-purchase or any items that belong to somebody else or a child. There are exemptions which include anything considered essential for domestic needs, such as a cooker, washing machine or furniture. They can however take non-essential items such as a dishwasher or a games console. Items used personally for either work, study or education, for example books, tools, computers are also exempt - to a value of £1350. 

For a limited company, a bailiff can only take items that belong to the company, and not goods that are leased or on hire-purchase. As a limited company is a separate legal entity, a director won’t be pursued personally unless they have signed personal guarantees. Bailiffs can take money, stock, office equipment or machinery. This can be extremely damaging for a company and could force them out of business, so if you receive notice from a bailiff, it is important to act quickly to either settle the debt or seek professional advice.

At The Insolvency Experts, our main goal is to rescue your business but sometimes that is not always possible. Our experienced Insolvency Practitioners in Bolton are available now on 0300 303 8284 or via our contact us page for honest and confidential advice."
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What can a bailiff legally take from my workplace or home?

Nick Brierley - April 3, 2018

Enforcement officers, also known as bailiffs can be appointed by a creditor to recover the money which is owed to them. Nick Brierley at Bolton Insolvency Experts explains your rights and what legal powers a Bailiff wields. If the business is not able to pay the debt in full, then the bailiff is entitled to […]

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  string(3168) "When a limited company becomes insolvent, directors receive protection from personal liability through what is known as the ‘veil of incorporation.’ The difference between this and a sole trader insolvency is that a sole trader and their business are not regarded as separate legal entities.

For a sole trader, it becomes a personal insolvency issue whereby they are wholly responsible for the debts of their business, and therefore at risk of personal bankruptcy if they can’t repay creditors.

A business decline can occur due to many factors, and sometimes alarmingly quickly. Seeking professional advice from an Insolvency Practitioner (IP) is vital as soon as you know there is a problem, because if the business enters insolvency, business and personal debts of the sole trader will be combined and they may have to declare bankruptcy.

Jason Elliott from The Insolvency Experts explains further.

There are two formal routes when sole traders become insolvent:

Individual Voluntary Arrangement (IVA)

An IVA is a formal and legally binding insolvency procedure which can last up to 5 years. If an IP believes it is viable, they may recommend an IVA. If the proposal is agreed, creditors who are include are not able to take legal action to recover any debts included within the arrangement. The debtor must continue to repay the agreed amounts throughout the IVA term, otherwise they risk the IP forcing the IVA and petitioning for their bankruptcy. The benefits of an IVA are often that cash flow is improved, and all unsecured debts can be included in the arrangement. Additionally, the funds to repay an IVA can come from future projected profits of the business, or from the sale of an asset or refinancing.

Enforced bankruptcy

When a creditor is owed over £5k, and has unsuccessfully tried to recover their debt, they can petition for bankruptcy of a creditor through the Court. HMRC are known to regularly pursue this route to recover arrears of tax and NI from businesses they believe to be insolvent, but if it is still viable there may be ways to improve the financial situation – by refinancing, for example, or negotiating an IVA.

Declaring bankruptcy

Declaring bankruptcy is an unfortunate last resort for sole traders and can result in personal and business assets being lost. Sole traders must petition for their own bankruptcy through the Court which then hands over control of assets to an appointed supervisor. The assets are then valued, and can be sold in order to repay creditors. The sole trader will not automatically lose their home - this is dependent on the equity available, and whether it is worthwhile for the supervisor to sell it. Whilst the bankruptcy period generally lasts for 12 months, those concerned can rebuild their credit rating during this time. At The Insolvency Experts in Bolton, our main goal is to rescue your business but sometimes that is not possible. Our experienced team are available now on 0300 303 8284 or via our contact us page for honest and confidential advice." ["post_title"]=> string(69) "If you are a sole trader concerned about Insolvency – read this now" ["post_excerpt"]=> string(0) "" ["post_status"]=> string(7) "publish" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(4) "open" ["post_password"]=> string(0) "" ["post_name"]=> string(38) "sole-trader-concerned-about-insolvency" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2018-04-06 12:15:41" ["post_modified_gmt"]=> string(19) "2018-04-06 12:15:41" ["post_content_filtered"]=> string(0) "" ["post_parent"]=> int(0) ["guid"]=> string(45) "http://www.theinsolvencyexperts.co.uk/?p=3516" ["menu_order"]=> int(0) ["post_type"]=> string(4) "post" ["post_mime_type"]=> string(0) "" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" }

If you are a sole trader concerned about Insolvency – read this now

Jason Elliott - March 26, 2018

When a limited company becomes insolvent, directors receive protection from personal liability through what is known as the ‘veil of incorporation.’ The difference between this and a sole trader insolvency is that a sole trader and their business are not regarded as separate legal entities. For a sole trader, it becomes a personal insolvency issue […]

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  string(3012) "A Partnership Voluntary Arrangement (PVA) is an agreement whereby Partnerships repay a proportion of business debts to unsecured creditors. It is useful to encourage viable partnerships back to profitability, and is similar to the limited company version which is the Company Voluntary Arrangement (CVA).  Jason Elliott from The Insolvency Experts explains further.

It’s essential that all partners are committed to making a success of an official payment plan and it’s important to know that even with a PVA in force each Partner may require their own Individual Voluntary Arrangements (IVAs) in addition to the PVA. Interlocking, or simultaneous IVAs serve to protect partners from personal bankruptcy whilst also safeguarding the business.
  
Essentially, a PVA provides a partnership’s creditors with an improved return than would be possible if the partnership was dissolved, and it also offers a chance to restructure the business.

The partners can put together a proposal for a repayment plan, usually with the help of an Insolvency Practitioner (IP), and this is based on repayment of a proportion of the debt – and an explanation is provided as to why the partnership has declined, and the reasons why its creditors should accept the proposed offer.

If at least 75% by value of creditors agree, the business will make a single payment each month rather than paying multiple creditors. The amount is distributed to creditors by the appointed IP.

If debts remain at the end of the PVA term they are written off, and the business carries on trading without the burden of unsustainable debt. PVAs generally last for three to five years, and are legally-binding agreements for both the partners and their creditors.

Gaining access to working capital via a PVA

Lack of cash behind the partnership’s insolvency could be due to temporary circumstances, making the underlying business potentially viable for the long term. The partners may be able to trade their way out of the situation, gradually improving cash flow with some alterations to operational practices or business structure. Alternatively, if the business owns one or more valuable assets that could be sold in order to generate a lump sum of working capital, the IP may decide that this is sufficient to support the business until things improve. There are numerous benefits to a PVA. Most importantly, partners stay in control of their business, and continue to trade. Further, a breathing space is created to deal with the partnership’s debts, without creditor pressure and creditors receive a higher return than if the partnership was wound-up. Refinancing or restructuring is more possible to achieve to overcome short-term cash flow problems and interest and charges on the debt are ceased. For more information on PVAs, contact one of our expert team at The Insolvency Experts in Bolton on 0300 303 8284 or via our contact us page " ["post_title"]=> string(50) "What is a Partnership Voluntary Arrangement (PVA)?" ["post_excerpt"]=> string(0) "" ["post_status"]=> string(7) "publish" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(4) "open" ["post_password"]=> string(0) "" ["post_name"]=> string(47) "what-is-a-partnership-voluntary-arrangement-pva" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2018-04-06 12:10:49" ["post_modified_gmt"]=> string(19) "2018-04-06 12:10:49" ["post_content_filtered"]=> string(0) "" ["post_parent"]=> int(0) ["guid"]=> string(45) "http://www.theinsolvencyexperts.co.uk/?p=3510" ["menu_order"]=> int(0) ["post_type"]=> string(4) "post" ["post_mime_type"]=> string(0) "" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" }

What is a Partnership Voluntary Arrangement (PVA)?

Jason Elliott - March 20, 2018

A Partnership Voluntary Arrangement (PVA) is an agreement whereby Partnerships repay a proportion of business debts to unsecured creditors. It is useful to encourage viable partnerships back to profitability, and is similar to the limited company version which is the Company Voluntary Arrangement (CVA). Jason Elliott from The Insolvency Experts explains further. It’s essential that […]

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  string(2332) "Investigations into payroll arrangements among companies across the UK brought in over £800m to the Treasury during the 2016/17 tax year.  Ben Cowgill at The Insolvency Experts provides further information.

Use of self-employed contractors

The figure represents a rise of 16% compared with the previous tax year and is believed to reflect an increased focus within HMRC on issues relating to company payrolls and self-employment. HMRC now has an established team of specialists which focuses on various employment statuses and the use of self-employed contractors across a variety of industries. Investigations specifically into businesses and their use of self-employed professionals is understood to have led to the discovery of numerous instances of alleged misuse of self-employed workers. Amounts recovered by HMRC as a result of these enquiries are known to be worth in excess of £800 million for the tax year 2016/17 because of a freedom of information request which saw those details released publicly by the UK tax authorities.

Intense scrutiny of gig economy by HMRC

HMRC’s clampdown on the use of what are sometimes called ‘hidden employees’ reportedly saw £503 million recouped from large companies during the most recent tax year, which represents a notable increase compared with the figure of £383 million recouped from large companies for the same reasons during the year 2015/16. The issue of ‘hidden employees’ and the tax implications for businesses that rely heavily on self-employed individuals have been the subject of considerable political and HMRC scrutiny in recent months. HMRC makes no secret of its suspicions as to how companies classify their workers and considering the scale that the gig economy has grown to, it is no surprise that it’s now under intense scrutiny by HMRC. As well as its broader brush investigations in which HMRC aims to collect millions at a time, it is also combing carefully through the minor details of payroll. Even the most trivial of expenses are now being investigated. For advice on this or anything else to do with your business, in financial distress or not, contact our team at The Insolvency Experts now on 0300 303 8284 or via our contact us page " ["post_title"]=> string(66) "Clampdown on ‘Hidden Employees’ brings in over £800m for HMRC" ["post_excerpt"]=> string(0) "" ["post_status"]=> string(7) "publish" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(4) "open" ["post_password"]=> string(0) "" ["post_name"]=> string(58) "clampdown-on-hidden-employees-brings-in-over-800m-for-hmrc" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2018-04-06 15:12:41" ["post_modified_gmt"]=> string(19) "2018-04-06 15:12:41" ["post_content_filtered"]=> string(0) "" ["post_parent"]=> int(0) ["guid"]=> string(45) "http://www.theinsolvencyexperts.co.uk/?p=3499" ["menu_order"]=> int(0) ["post_type"]=> string(4) "post" ["post_mime_type"]=> string(0) "" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" }

Clampdown on ‘Hidden Employees’ brings in over £800m for HMRC

Ben Cowgill - March 17, 2018

Investigations into payroll arrangements among companies across the UK brought in over £800m to the Treasury during the 2016/17 tax year. Ben Cowgill at The Insolvency Experts provides further information. Use of self-employed contractors The figure represents a rise of 16% compared with the previous tax year and is believed to reflect an increased focus […]

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  string(2881) "If you believe a supplier or customer is experiencing financial distress, it is important to find out as much as possible about their situation, in order to stop it having an adverse effect on your business. Our Bolton Insolvency Experts can give a free consultation if you find yourself in this situation.

Identifying the signs of financial difficulty in a customer or supplier as soon as possible gives you time to think, consider and readjust. You may need to reorganise your source of supply, or to revaluate your options should your customer go out of business. The after effects when you lose a business connection like this can have a massive impact, particularly if it involves a principal supplier or key customer. 

Ben Cowgill at Bolton Insolvency Experts explains what should you look out for, and how can you protect your own business.

Indicators that your supplier/customer is in financial distress

• Avoidance of communications and guarded when you contact them • Late payments when previously there was no history of default • Company is not developing as you would expect – perhaps they are using out-dated technology, or selling assets with a view to streamlining the business • Customers requesting an extension to their credit terms • County Court Judgements have been made against the supplier or customer • Company accounts have been filed late • Directors or senior staff are resigning

Credit risk

The risk of offering credit to your customers can be mitigated with a strong credit management policy. Performing credit checks on your customers, not only at the beginning of the business relationship, but also at regular intervals will help to identify a decline. Other useful policies when dealing with credit risk include presenting clear terms of trade in all of your contracts. Terms and conditions might include: • Charging interest on overdue payments • Ownership of goods only transfers to the customer once final payment has been received • The obligation for customers to contact you immediately with any invoice queries or problems, rather than waiting until the due date

Companies House information

Valuable information can be obtained from Companies House. You can examine a company’s last set of accounts or ask your accountant to do this on your behalf, discover whether they have sold any business assets and if the proceeds have been used to pay trade creditors – this is a common sign that cash flow is an issue. If you are concerned about the financial stability of either a customer or supplier and are worried about the impact this could have on your own business contact Bolton Insolvency Experts today on 0300 303 8284 or via our contact us page for confidential, honest advice. " ["post_title"]=> string(85) "If I suspect a customer or a supplier are in financial distress – what should I do?" ["post_excerpt"]=> string(0) "" ["post_status"]=> string(7) "publish" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(4) "open" ["post_password"]=> string(0) "" ["post_name"]=> string(30) "supplier-in-financial-distress" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2018-03-13 09:41:09" ["post_modified_gmt"]=> string(19) "2018-03-13 09:41:09" ["post_content_filtered"]=> string(0) "" ["post_parent"]=> int(0) ["guid"]=> string(45) "http://www.theinsolvencyexperts.co.uk/?p=3479" ["menu_order"]=> int(0) ["post_type"]=> string(4) "post" ["post_mime_type"]=> string(0) "" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" }

If I suspect a customer or a supplier are in financial distress – what should I do?

Ben Cowgill - March 13, 2018

If you believe a supplier or customer is experiencing financial distress, it is important to find out as much as possible about their situation, in order to stop it having an adverse effect on your business. Our Bolton Insolvency Experts can give a free consultation if you find yourself in this situation. Identifying the signs […]

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  ["post_content"]=>
  string(2784) "Jason Elliott at Bolton Insolvency Experts explains why sometimes business cashflow problems can affect you personally. 

Sole traders and individual members of a partnership are personally responsible for business debts, but if you own a limited company then the limited liability status of your company means that any business debts are limited to the company and not the directors personally. This means that as a director your personal finances should not be affected. However, although this sounds quite straightforward there are exceptions which you should be aware of. 

Personal guarantees

If you have signed personal guarantees, for example on a business loan or property lease, and the business is unable to meet the agreed payment terms, then as a guarantor you will be personally responsible. If you fail to meet the payment schedule, then the creditor, whether it’s the landlord or the bank, will pursue you personally for the debt. You should look at all your agreements to see precisely what your situation is.

Trading whilst insolvent

A company is classed as insolvent if it’s unable to pay its debts as they fall due or when its liabilities exceed its assets. If you believe that your company is insolvent and you continue to trade, adding to the company debt, then as a director, you can become personally liable for that debt. In these circumstances, if a director incurs further debt whilst knowing that the company has no chance of recovering and paying that debt back then this can be classed as wrongful trading. If a company director is found guilty of wrongful trading, even though they have been acting through the company, they can become personally liable for any losses suffered as a result and they may also have to pay damages. Likewise, if a misfeasance claim is brought against the company, where the directors have knowingly acted in an inappropriate way and another party suffers as a result, then again directors can become personally liable.

Overdrawn directors’ loan account

Having an overdrawn directors’ loan account when a company goes into liquidation also means that the directors will be personally liable for repaying that loan. The insolvency practitioner handling the liquidation can demand repayment of the loan as it is their duty to act in the interest of company creditors. They can even take legal action against directors to force them to pay, which could lead to bankruptcy if they are not able to pay. If your company is in financial distress and you are worried about the impact this could have on you personally, contact our team at Bolton Insolvency Experts now on 0300 303 8284 or via our contact us page." ["post_title"]=> string(85) "Could cashflow problems in my business affect my personal finances and credit rating?" ["post_excerpt"]=> string(0) "" ["post_status"]=> string(7) "publish" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(4) "open" ["post_password"]=> string(0) "" ["post_name"]=> string(32) "cashflow-problems-in-my-business" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2018-03-12 15:39:07" ["post_modified_gmt"]=> string(19) "2018-03-12 15:39:07" ["post_content_filtered"]=> string(0) "" ["post_parent"]=> int(0) ["guid"]=> string(45) "http://www.theinsolvencyexperts.co.uk/?p=3462" ["menu_order"]=> int(0) ["post_type"]=> string(4) "post" ["post_mime_type"]=> string(0) "" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" }

Could cashflow problems in my business affect my personal finances and credit rating?

Jason Elliott - March 12, 2018

Jason Elliott at Bolton Insolvency Experts explains why sometimes business cashflow problems can affect you personally. Sole traders and individual members of a partnership are personally responsible for business debts, but if you own a limited company then the limited liability status of your company means that any business debts are limited to the company […]

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