Will Customs & Excise act?

[meridian35]

Hi, new user here. Have read some posts and been much heartened by the support and knowledge shown. Background: three years ago set up a limited company to purchase and run a leasehold public house. In August this year after two years of losses we called it a day as there was no hope of even meeting the wages never mind everything else owed. the premises and inventory were repossesed by the landlord because of unpaid rent and the stock was mainly reposessed by the suppliers who had not been paid for it.

Basically the company owes six thousand in wages, 14 thousand in VAT, 190 thousand to the bank (has personal guarantee so is now owed by myself) approximately 20 thousand to various other creditors and 200 thousand to the directors (myself and my husband, this doesnt include the bank loan which we guaranteed) Let me make it clear there are no assets belonging to the company at all.

Bit of a mess really:(

Will Customs & Excise act to liquidate us as they will not get anything anyway?

I have started to get employment tribunal notifications for the staff as well, claiming unpaid wages because they cannot claim under the NI scheme if there is no liquidator.

Any advice or comments greatly appreciated:|

[OldWelshGuy]

The debts are company debts, but obviously you have a personal guarantee for some of it. So I can't see how anyone other than those who hold the PG docs can chase you.

HMCE will eventually wind up the Ltd co as part of their recovery procedure.

[Zeno]

Without wanting to worry you more, has your accountant explained anything regarding wrongful trading?

[Spongebob]

Hi, new user here. Have read some posts and been much heartened by the support and knowledge shown. Background: three years ago set up a limited company to purchase and run a leasehold public house. In August this year after two years of losses we called it a day as there was no hope of even meeting the wages never mind everything else owed. the premises and inventory were repossesed by the landlord because of unpaid rent and the stock was mainly reposessed by the suppliers who had not been paid for it.

Basically the company owes six thousand in wages, 14 thousand in VAT, 190 thousand to the bank (has personal guarantee so is now owed by myself) approximately 20 thousand to various other creditors and 200 thousand to the directors (myself and my husband, this doesnt include the bank loan which we guaranteed) Let me make it clear there are no assets belonging to the company at all.

Bit of a mess really:(

Will Customs & Excise act to liquidate us as they will not get anything anyway?

I have started to get employment tribunal notifications for the staff as well, claiming unpaid wages because they cannot claim under the NI scheme if there is no liquidator.

Any advice or comments greatly appreciated:|

My heart goes out to you. 'Bit' of a mess doesn't even begin to describe it!

Like anyone who goes into business I imagine you were simply following a dream. You do seem to have made the most unholy hash of it, however!

To practicalities, though.

HMRC will eventually initiate winding up proceedings through the High Court in London. Let them - do not contest it and do not attend.

In the meantime you should write, using company notepaper, to all creditors including the bank and the landlord stating formally that the company has ceased trading due to it becoming insolvent. This fulfills all your obligations as a director of an insolvent limited company. Explain that the company does not have the funds (upwards of £5k+VAT) to appoint a liquidator and invite each creditor to wind the company up themselves. The only one that will do this of course, is HMRC.

Reply to the tribunal notifications in exactly the same way. Your staff will have their redundancy entitlements (if any) paid by the government but not any wages owed or holiday pay. As and when a tribunal is called I would recommend attending and explaining the situation to the chairman. This is looked well upon.

That's the company taken care of - it is all pretty straightforward, although it drag on for a year or more.

I am more concerned about you and your husband's personal situation.

You appear to owe at least £190k to the bank under the personal guarantee. You do not mention any personal guarantee to the landlord but I would be surprised if there wasn't one in place. You are also £200k down as a creditor to the company.

What is the £200k made up of? Capital introduced into the company? Unpaid salaries? A combination of the two? Did you remortgage your house to put money in personally? Do you own a property?

For 99% of people this situation would mean inevitable bankruptcy.

My advice if this is the case with yourselves is to do it immediately and get it out of the way. That way you can put this whole disaster behind you and get on with your lives.

If you are lucky enough to have other major assets and more importantly a healthy income stream, you need to take professional advice.

Cheers
Bob

PS Without wanting to worry you more, has your accountant explained anything regarding wrongful trading?

Take no notice of this. Hardly anyone is ever pursued for wrongful trading, and even then only for obvious fraud. You clearly do not come into this category. And anyway, there's nothing you can do about it now. Only worry about the things you can do something about!

[yorkshirejames]

You need specific professional advice concerning your liabilities. Where in the country are you? I must admit that I am struggling to see how a leasehold premise could have consumed so much money - but that is not my place to wonder.

Having this business wound up (whether initiated by yourself or a creditor) seems the best thing to do. I am concerned about the personal guarantees though. The answers to Bob's questions (do you have a house, etc) may determine what you as individual(s) do next. Good luck.

[oldeagleeye]

I think that you have a valid point however James. One that I would certainly be asking if I were a creditor.

How can a leasehold pub run up some £500,000 in debts in just 2 years. I am afraid to say I would also ask how a husband & wife had the nerve to claim £200,000 in directors salaries from a loss making enterprise. It is laughable.

No-one likes to see anyone go out of business however and I think that the best thing the OP could do would be call in a professional IP who would get this sorted within a month.

Robert

[yorkshirejames]

How can a leasehold pub run up some £500,000 in debts in just 2 years. I am afraid to say I would also ask how a husband & wife had the nerve to claim £200,000 in directors salaries from a loss making enterprise. It is laughable.

We shouldn't speculate, but maybe this is one of the high end pubs/nightclubs in a key city centre location. The post suggests the business was going for two years - in which case the 'salaries' seem reasonable.

[Spongebob]

I think that the best thing the OP could do would be call in a professional IP who would get this sorted within a month.

Robert

And who is going to want an upfront payment of at least £4500+VAT to even start work on the case. Probably a lot more.

I suspect that the OP does not have the money to pay this. I also suspect that with the guarantees hanging over their heads it is advice on personal insolvency they should be seeking. The company wind-up can take care of itself.

Where has the OP gone, by the way?

[Connections_Media]

Just out of curiosity how the hell did you get in £500k of debt in just 2 years you must of been some serious drinkers or never been open..

[Spongebob]

I would also ask how a husband & wife had the nerve to claim £200,000 in directors salaries from a loss making enterprise.

Nowhere does the OP suggest that £200k has been claimed in salaries. They simply say that they are owed £200k by the company.

This could well be money introduced into the business. We don't know.

[Zeno]

Just out of curiosity how the hell did you get in £500k of debt in just 2 years you must of been some serious drinkers or never been open..

I will take a wild guess and go with:-

1. The owners were new to the licensed trade
2. They paid a huge premium to buy the business including goodwill but then-
3. Spent an arm & a leg renovating the place

[oldeagleeye]

QUOTE
And who is going to want an upfront payment of at least £4500+VAT to even start work on the case. Probably a lot more.

The times I have heard that. Have you ever contacted a firm of IP's. Most will give you an initial interview FREE. It then depends on the case. If they know that they can get their fees from any other party HMRC - VAT the bank most will work on that basis leaving just the cost of some incidentals like publishing in the London Gazette etc. £500 - £1,000 at most.

get the facts right then Bob.

[Spongebob]

QUOTE
And who is going to want an upfront payment of at least £4500+VAT to even start work on the case. Probably a lot more.

The times I have heard that. Have you ever contacted a firm of IP's. Most will give you an initial interview FREE. It then depends on the case. If they know that they can get their fees from any other party HMRC - VAT the bank most will work on that basis leaving just the cost of some incidentals like publishing in the London Gazette etc. £500 - £1,000 at most.

get the facts right then Bob.

I was working with the facts. The OP states that the company has no assets.


Your assertion that IPs will work without an upfront fee being paid is quite correct - if there are assets in the company!

The idea that this company may have overpaid VAT or corporation tax in its 2 years of life is laughable!

[oldeagleeye]

The OP does not know the IP business. those guys can claim back tax. Do deals with banks. It seems over £500K went over just 2 years or so. They may be able to get some of that back.

In any event. It is worth a free interview.

[Spongebob]

Hey, it's worth a free interview. I wouldn't be holding my breath though!;)