This is the first case in which the Insolvency Service has exercised its powers to apply to Court for a Compensation Order against disqualified directors, resulting in creditors being reimbursed that ordinarily would have lost out. Click here to read about it
Marshall Peters – Survival of the Fittest
It is an often quoted statistic that around 80% of start up businesses are doomed to fail, which is possibly why most of the funding and mentoring support is aimed at this sector, but what happens to businesses which survive these early years? When you take into account that small businesses represented 99.3% of all private sector businesses at the start of 2016 and 99.9% of these were small or medium sized (SME’s) it is hardly surprising that more of these business owners are looking for additional support to continue trading, and thereby contributing to the economy. Total employment in these organisations was 15.7 million, 60% of all private sector employment in the UK. with a combined annual turnover of £1.8 trillion, 47% of all private sector turnover in the UK.
Given these figures alone it is essential therefore that in order to sustain a robust economy there must be mechanisms in place to ensure that should such organisations experience difficulty they have access to trusted professional advice.
Marshall Peters Limited is regulated by The Insolvency Practitioners Association (“IPA”)
As a Regulated Organisation and Adviser we have attached links to recent documentation provided by R3 Association of Business Recovery Professionals, which sets out the misleading information provided by unregulated advisers. The documents, for both individuals and companies, offer explanations to:-
Companies in 2015
Total annual company insolvencies were at the lowest level since 1989.
The decrease was mainly driven by a decrease in the compulsory liquidations, which fell to the lowest annual total since 1981.
People in 2015
Total individual insolvencies were at the lowest annual level since 2005.
What are the options available to a company when faced with insolvency?
The most common routes available when facing financial problems and the restructuring of the business are Administration, Company Voluntary Arrangement (CVA) or Liquidation (CVL). The choice can be difficult and giving advice is also difficult without being given all the facts at the time. In an attempt to make the choice easier here is a brief appraisal of each option.
Administration
When a company is insolvent and facing pressure from it’s creditors, disputes and/or financial, it may enter the administration process.
During this process, the director(s) lose control of the business and the Administrator takes over control and becomes responsible for the day to day running of the business.
Administration buys a company time to address it’s problems and seek a way forward to it’s financial turnaround.
The Administrator must have a purpose and under current rules the process can last no longer than 12 months without approval of it’s creditors or court.
Now that Christmas has passed and New Year is upon us you may be thinking of reducing your debt level.
Too much Christmas spending, the credit card bills are coming through the letter box and this year’s holiday’s are being advertised on that flat screen television that you so generously bought for yourself from Santa.
Are you drowning in Christmas debt together with the exotic holiday you enjoyed so much last year?
Is it your resolution to reduce your debt level during 2015? No one has ever achieved financial wellness with a January resolution that is broken by February.
A true saying but in today’s world this is not quite the case.
In a world where cash is less frequently used on a daily basis how do SME’s and individuals keep track of their finances.
It is too easy to pay by credit card, you can even use your smart phone to make transactions.
In the corporate world what is the point of having limited liability if the director is using their own credit cards to purchase goods. The liability stays with the individual. This together with personal guarantees are becoming regular features in one man businesses.
The taxman has prosecuted against more individuals suspected of tax dodging – whilst still being accused in the press of letting off the hook the corporate giants.
The number of court cases HMRC has brought for illegal tax evasion last year increased by almost a third.
At the same time the revenue has been accused of “hypocrisy” for allowing multinational corporations to pay small bills, while hammering individuals and small businesses.
During 2013/14 the taxman prosecuted 795 individuals it suspects of wrongdoing in an effect to close down Britain’s £35 billion annual tax gap. That is 615 more than the previous year.
During the past 18 months we have handled the winding up of several small consultancy businesses primarily in the IT sector.
They have been set up by it’s accountant in a tax efficient way for it’s one man band director to reduce their tax liability.
Unfortunately, the owner is not often being made aware of the perils of withdrawing monies as and when the contract ends whilst being in the position of not holding sufficient reserves to meet it’s corporate tax debts.
Data produced by the Bank of England shows that consumer borrowing soared to more than £1 billion in July, the highest figure since March of this year and a large increase on the figure for June.
Consumers borrowed £1.1 billion on credit cards and unsecured loans during July, compared to £655 million on the previous month.
Borrowing on credit cards alone more than doubled during the period.
Tax Scheme investors set to receive Accelerated Payments Notices (APN’s)
Investors in alleged tax avoidance schemes will from Saturday 30th April begin receiving tax bills from HMRC if they believe the schemes generated inappropriate amounts of tax relief. The first so called APN’s will fall through letter boxes anytime from the above date.
A spokesman from Revenue & Customs stated that investors will be given 90 days to pay what amounts collectively to more than £7 billion in disputed tax.
If you need expert advice on the above, telephone immediately on 01257 452021 to speak to one of our friendly team.
A directors’ loan account (DLA) can become a very serious issue to any director where their company is in financial difficulties.
Should the company owe a director an amount of money and the director know or should know that the company is insolvent they should not discharge themselves or declare a further dividend (should the director be a shareholder) with a view to recovering any monies due to them. This will be conceived as a preference and would be pursued by any insolvency practitioner upon appointment.
On the other hand should there be a credit balance, that is money drawn by a director and outstanding to the company at any subsequent year end or on insolvency an insolvency practitioner will seek to recover in full for the benefit of it’s creditors. An overdrawn DLA can be a very serious concern to a director when their company is in financial difficulties.
Recent figures show that personal bankruptcies have reduced by 20.1% to 6,919 in the final quarter of 2012 from 8,658 in the corresponding period of 2011.
Individual Voluntary Arrangements (IVA’s) fell to 10,986 in the same quarter (April 2012), from 13,027 for the corresponding period of 2011.
This would suggest that the public are coping better with the recession than anticipated until you note the rise in numbers of individuals entering into Debt Management Schemes during 2012.
A rise in ‘Zombie Debtors’, people paying only the minimum charges on their debts and not the debt itself, is masking the financial problems being encountered by many households in the UK according to insolvency reports.
A recent review has shown a fall in personal insolvencies so far this year and predicts this will continue throughout 2013.
It records that approximately 25,000 people have entered into either bankruptcy or an individual voluntary arrangement (IVA) in the first 3 months of 2013, a 16 per cent drop on the previous period.
Concessions made to small businesses by HM Revenue & Customs over radical PAYE reforms have been watered down, say tax advisers.
They say they are being limited to businesses with fewer than 50 employees which do their payrolls manually, rather than with the aid of a computer.
But HMRC says it has not changed the scope of the temporary relaxation of reporting requirements for small employers. Until October 5th they can send payroll data on a monthly basis.
Fears that the smallest businesses would struggle to cope with the more demanding Real Time Information System, even with the help of free software, led to HMRC bowing to pressure to give them more time to adapt.
Revenue and Customs is approving more than 90 per cent of applications by small businesses looking to raise funding through the Enterprise Investment Scheme (EIS).
The EIS is a tax relief scheme that was introduced in 1994 to try and boost investment into small unquoted companies. Investors benefit from different tax reliefs while early stage businesses benefit from investment.
More than £27.4 billion has been written off by Britain’s tax collectors over the past five years, according to a new report.
The document accuses HM Revenue and Customs of ‘giving up’ on this massive figure owed on all type of taxes, from National Insurance to income tax.
The amount is the equivalent of about £1,000 for every family in the country.
The report from campaign group the Taxpayers’ Alliance – entitled ‘How the taxman loses billions every year’ – says the amount of money written off between 2006/07 and 2010/11 is ‘ludicrous’.
Officials have urged young people to seek advice if Christmas has pushed them into unmanageable debt and to avoid taking out high interest ‘payday’ loans.
The warning from the Insolvency Service came as official figures showed a growing mountain of debt among younger people.
Almost 300,000 businesses failed last year according to a new report by the Office of National Statistics.
The number of ‘business deaths’ rose by 20,000, some 7.4% to 297,000 between 2009 and 2010.
The ‘death rate’ also hit 12.9% compared to 11.8% for the previous year. It was the second consecutive year they had outnumbered the number of business births which fell by 0.4% to 235,000.
Half of Britons being plunged into insolvency are women, the highest proportion since records began, a report revealed today.
It predicts official figures, which will be published tomorrow, will show women account for nearly 50% of all insolvencies in England and Wales for the first time in history.
Experts say they fear it is proof that women have paid the biggest price for the recession, with hundreds of thousands losing their jobs.