This section covers what happens when a company cannot pay what it owes, from the first HMRC demand to the appointment of a liquidator. It is written from the side of the table that takes the appointment: what each process requires, what the office-holder must do, and where the director’s own exposure sits.
Most directors arrive here with one of three problems: a tax debt HMRC is pressing, a creditor threatening or presenting a winding-up petition, or a company that has run out of road. The order matters. The options open to a director narrow at each step, and a winding-up petition removes several of them at once.
Start with the guide that matches where the company is now. For a view on your own company’s position, call AABRS®
on 0208 444 3400.
Start with where the company is now
HMRC Tax Problems
Tax arrears, Time to Pay, threatening letters and what HMRC can do next. HMRC is the creditor most likely to petition, so this is usually where the timetable starts.
VAT Arrears
What happens when a VAT payment is missed, the penalties and interest that follow, and when a payment plan is realistic.
Winding Up Petitions
A creditor has threatened or presented a petition to wind the company up. What the timetable is, what can still be done, and what happens to the bank account.
Liquidation
The three routes into liquidation, what the liquidator does once appointed, and where the director’s exposure sits.
The director's personal exposure
Wrongful and Fraudulent Trading
Trading on when insolvent liquidation could not reasonably be avoided can leave a director ordered to contribute personally to the company’s assets.
Personal Liability Notices
HMRC can make a director personally liable for unpaid National Insurance where the failure to pay was down to the director’s fraud or neglect.
Personal Guarantees
A guarantee signed for a company loan or lease survives the company. What it commits you to, and what happens when it is called in.
What Happens to a Director During Liquidation
The liquidator reports on every director’s conduct to the Insolvency Service. Disqualification, if it follows, can last up to 15 years.
Phoenix Companies
Starting again after a liquidation is lawful, but reusing the old company’s name is restricted for five years.
Working with an insolvency practitioner
What is an Insolvency Practitioner?
Who can take an insolvency appointment, how they are licensed, and who they answer to once appointed.
When Would You Need One?
The points at which the law, or the company’s position, means a licensed practitioner has to be involved.
How to Find an Insolvency Practitioner
What to check before you instruct one, and what the practitioner can and cannot do for a director once appointed.
Insolvency Practitioner Fees
In an insolvent liquidation, the creditors, not the practitioner, approve the basis of the liquidator’s fees.
An Insolvency Practitioner's Obligations
The statutory and professional duties an office-holder carries, and to whom.
The Insolvency Code of Ethics
The ethical code every licensed practitioner must follow, and the threats to objectivity it requires them to deal with.
Complaints About an Insolvency Practitioner
There is no ombudsman. Complaints go through the Insolvency Service’s Complaints Gateway to the practitioner’s licensing body.
