HMRC flexing their muscles!
Now that accountants have got over the end of the January deadlines for the filing of self assessment returns, perhaps now is a good time for accountants to reflect and take a closer look at limited companies accounts to see if any of their clients need to take advice, as perhaps the directors think that they are just experiencing cash flow problems, when they may be at risk of “trading whilst knowingly insolvent”.
Have the directors come to an arrangement with HMRC to repay crown debts and if so, are they up to date with the payments, or are the directors simply “burying their heads and hoping it will all go away”.
Although HMRC can be sympathetic if there is a genuine reason for non payment of crown debts and allow extra time to repay the liabilities due to them, HMRC are not so forgiving when the director simply do not pay, or do not adhere to the payment plan that has been agreed.
This can then lead, to HMRC petitioning for the compulsory liquidation of the company and liquidation is them forced onto the company.
Once a petition is filed in court to wind up the company, the bank account is then frozen, when the petition is advertised. This can then immediately force the business to cease to trade and although they may have a good order book of work, they cannot physically finish the jobs off, as the bank account has been frozen.
HMRC are getting “tough” with repeat offenders and directors who take no action at all, in dealing with company debts.
There has been a significant increase in the number of winding up petitions presented by HMRC, although quite surprisingly, the number of compulsory liquidations has declined in the current statistics published.
This may be due to companies agreeing to pay off the crown debts in order to avoid liquidation and this will normally have to be paid, before the winding up has been advertised.
Once the petition has been advertised, the only way that a company can use the bank account is when they apply for a “validation order” through the courts and the company will at this stage, need the assistance of an Insolvency Practitioner.
Once a winding up petition has been presented, if the company decides to continue to trade and sell off some of the assets to pay HMRC, then any disposal of assets can be attacked by the Liquidator once appointed, as this will be classed as a “post petition disposition” and the liquidator will also look to see if the assets were sold “at value”.
For more information, please contact Debbie Cockerton on 01702 344558, debbiecockerton@dcabr.co.uk or take advantage of the “ICPA Recovery Helpline”, which operates 7 days a week (8am to 8pm) on 0800 066 2540. www.dcabr.co.uk
