The Company was incorporated was an owner managed business and its principal activity was the provision of hardware maintenance services to both medium and larger corporations.
The company operated from a serviced office in Bedford. With no facility in place with its bankers, the Company was dependent on its own cash-flow for liquidity.
Utilising the contacts of one of the Director’s colleagues in the hardware maintenance sector, the Company made an initial approach to a large supermarket chain and managed to secure the on-going data and voice cabling maintenance across all of its UK stores, including those in Northern Ireland. Thereafter, a relationship was also developed with a large phone company, leading to the Company becoming its preferred Wi-Fi supplier whilst also providing additional Wi-Fi survey, design, installation and maintenance services.
Having attained preferred supplier status, the Company was then able to secure a number of opportunities to assist in Wi-Fi deployments for large corporate entities. As a result of the rapid expansion of the business during this period, additional staff were required, with the number of employees rising from 3 to 13 at the Company’s peak.
The Director had no previous experience of operating a limited company and unfortunately during the first years of trading, the Company’s records were not adequately maintained, resulting in the accumulation of significant penalties from HM Revenue & Customs for VAT and PAYE arrears.
As the Company was generating sufficient revenue, it could afford to appoint a qualified accountant to act as its finance manager and she was able to bring the records up to date. From this it emerged that, as well as being in arrears to both suppliers and HM Revenue & Customs, several CCJs had been obtained against the Company.
To address the position, a recovery plan was immediately implemented, with all concerned suppliers contacted and payment plans agreed in order to settle the outstanding balances. The supplier arrears were successfully cleared as a result all CCJs had been satisfied.
At the time of contacting the suppliers, the Company had also approached HM Revenue & Customs to agree a payment plan and remained in regular communication with them regarding the Company’s position in the months subsequent. However, as the business was still continuing to grow at that time, the Company found itself making payments of up to £10,000 per month towards the arrears as well as incurring substantial new VAT liabilities each quarter which it was without funds to discharge.
The situation soon became untenable and the Director sought the advice of AABRS, who recommended that the Company should cease to trade and be placed into creditors’ voluntary liquidation.