The Company was formed to recruit analytics staff principally for the financial technology sector.
Initial funding for the Company was raised through a share issue and the introduction of an unsecured loan from an investor. Thereafter, with no overdraft facility in place, the Company was reliant on its own cash flow for liquidity.
The Company moved to serviced offices in London and the Company sourced clients through existing contacts, networking and recommendations.
Growth in the Company necessitated the recruitment of additional staff. However, cash flow constraints and the inability to raise additional working capital, forced the director to hire young relatively inexperienced individuals rather than experienced fee earners and opportunities were missed which impacted on sales.
In addition, the Company opted to engage in low cost accountants, who were not based locally, as the director had the expectation of guidance from his investor, who would assist with the financial operation side of the business.
With increasing demands from the growing client base, the director recruited a finance manager tasked with establishing greater cost controls through monthly reporting and to ensure that the Company was compliant in the filing and submission of all returns to HM Revenue & Customs.
In the weeks that followed inadvertent bookkeeping errors were discovered revealing VAT liabilities to HM Revenue & Customs in excess of £190,000.
Thereafter, immediate steps were taken to negotiate a time to pay agreement with HM Revenue & Customs.
However, unable to meet the suggested monthly repayments whilst sustaining the Company’s ongoing trading, the Company sought the advice of AABRS and the advice given was that the business was untenable.
An independent valuation of the business was undertaken and the company was placed into creditors’ voluntary liquidation.