Compulsory Liquidation

[PROCESSJIGSAW]

Hello

After some experiences on this, I have seized trading and written to the HMRC on occasions requesting them to go down the Compulsory Liquidation option as I cant afford 5K fees for an IP.

They dont respond but keep sending me letters informing me that they have passed to distraint department which could start to seize goods, I know these are standard letters, but just wondered how i can help get to this stage.

Last time I spoke with them in April, they threatened to wind my Ltd company up if I did not keep to the payment plan.

I am nervous about calling them and wanted to keep to writing

any adivce would be appreciated

 

[David Griffiths]

Have to disagree with the previous post. HMRC are very likely to instigate winding up proceedings, with no thought at all about whether they will get their money or not. It's just part of their process, and gets it off the desk of the debt collection unit so it's not their problem. However, they will do this in their own time, and not at the request of the company or its directors

It's also clear from the first post that this is a limited company liquidation, so there is no possibility of them taking a charge over personal property. Sorry,but suggesting that they can might cause unnecessary worry for the OP

Much depends on the circumstances, and whether the OP owes any money to the company for an overdrawn directors loan. If there's no debt due to the company, I can't see the point in continuing with a payment plan for a debt that belongs to the company.

Have a search for posts by Spongebob who has offered much useful advice on here

 

[Spongebob]

HMRC will not respond to your request for compulsory liquidation. They will exhaust their own collection procedures first, which may include distraint against the company's assets leading to seizure and removal. HMRC can do this without a court order, unlike other creditors.

As David says though, you do not appear to be at risk personally, so all you can do is wait for HMRC to go through their procedures and finally they will initiate winding up proceedings. This might take anything between 6 months and two years.

My advice is always to remove all company assets to a place of safe keeping and let the Official Receiver deal with them once he has been appointed. That way they are safe from bailiffs and there is a very good chance that they will be overlooked!

It's about taking control of the situation...

 

[David Griffiths]

Just to clarify my post - there was a post with incorrect advice made by a new user who seems to have been banned for spamming the forums

 

[PaulCCS]

If the company has assets then an IP will work on taking his costs from the realisations. That would put you in control of the timescales and not the HMRC.

 

[Spongebob]

If the company has assets then an IP will work on taking his costs from the realisations. That would put you in control of the timescales and not the HMRC.

I'm sure you know better than that, Paul.

An IP will want around £4-5k + VAT for a simple liquidation. To realise this from a fire sale there would need to be around £50k worth of stock and equipment at book value. Either that or at least 10 grands worth of debtors.

It is clear that the IP's company has neither - along with most small companies. This is why knowing the strategy for engineering a compulsory liquidation is so important for any small company owner facing insolvency.

There is of course, no profit in it for an 'Insolvency Specialist'!

 

[PaulCCS]

Whilst I acknowledge some of your points Spongebob, I think it's impossible to tell in this case from the information available, which is why i made the point.

There are various options, comp liq being one of them, and it is up to the director to choose the most appropriate. It's certainly not the only option - i prefer to be open minded...

 

[Spongebob]

I'm all in favour of open-mindedness, Paul. I will cheerfully admit that in many cases a voluntary liquidation using an IP is the best option - when there are substantial assets for example, or if time is of the essence to get a Phoenix company up and running from the same premises - but open-mindedness works both ways.

Q. Why is is that no Insolvency Practitioner or 'Specialist' in history has ever advised a client that they might be better off allowing their company to be wound up by a creditor and then liquidated compulsorily by the Official Receiver rather than go to the expense of a voluntary liquidation?

Similarly, in the field of personal insolvency, why is it that Insolvency Practitioners and 'Specialists' habitually peddle IVAs to their clients when in probably 90% of cases bankruptcy is quite clearly the best option?

A. The answer to both questions of course, is that those working in the area of insolvency get rich by giving advice to desperate people that is purely in the interests of generating the largest fees. Compulsory liquidations and personal bankruptcies generate no fees whatsoever and so clients are positively warned against the 'dire consequences' of both. A truly open-minded 'Insolvency Specialist' would give best advice that was in the interests of his client. This however, would undoubtedly get him the sack - such is the putrid state of the insolvency 'industry'.

You may well be an honourable exception to the rule Paul, like our member here Yorkshire James. If so, I apologise for including you in my generalisations.

 

[PaulCCS]

Spongebob, I'm highly offended. lol. I think it is a bit of a generalisation though. My view is to provide the best of advice for the client, irrespective of what is best for me. In the long run I think that will work out better anyway...

 

[Alan R Price]

Hey, Spongebob - ouch! While I know there appear to be some IPs who give advice based more on the perception of how they can maximise their fees than what is right for the client, I for one have never done that! A good IP will always discuss all the options and compulsory liquidation is certainly one of them; however it is often not the right one on grounds of delay and cost (the secretary of state fees for a start). Furthermore, many directors would rather deal with an IP than a civil servant in the form of the OR. In the final analysis it is up to the IP to give a balanced view (and direct clients to the OR's website and other referral sources) and let the client make his own decision about the best way forward.

With respect, it is simply not the case that "compulsory liquidations and personal bankruptcies generate no fees whatsoever". We deal with both in my practice and are very successful in realising assets, and making returns to creditors. And of course we expect to be paid for the job we do.


And I'm not rich.

 

[Spongebob]

With respect, it is simply not the case that "compulsory liquidations and personal bankruptcies generate no fees whatsoever". We deal with both in my practice and are very successful in realising assets, and making returns to creditors. And of course we expect to be paid for the job we do.


And I'm not rich.

But that presumably is when you are appointed by the OR to do their job for them and receive a fee from the public purse...

I'm talking about when a potential private client comes to you for advice. How many times do you recommend a compulsory liquidation or personal bankruptcy, even when it is patently in the client's interests or if they do not have any funds whatsoever?

 

[Alan R Price]

Spongebob

Trustees in bankruptcy and liquidators in compulsory liquidations are paid out of the assets of the estate or liquidation - in effect the creditors pay as they do in any other form of insolvency. There is no public funding of IPs at all - in fact the secretary of state levies a tax of 17% of all money realised over £2,000 in bankruptcies and compulsory liquidations! This money would otherwise be available for creditors. If the Official Receiver remains trustee or liquidator he will levy additional fees for acting - again, these are paid out of the assets realised, not the public purse.

I agree that there has been mis-selling of IVAs however my firm values its relationships with people who refer their clients, contacts etc. to us (and remember we are not permitted to pay referral fees) so it is simply not worth us giving bad advice. We frequently advise people that they might be better off going bankrupt than attempting an IVA but the final decision is theirs. It is up to us to inform them of the implications of a particular course of action however the decision is very subjective and will be based on practical, emotional and moral considerations.

My firm does not usually do consumer IVAs because they often do not make sense financially and are frequently the wrong solution for the debtor, who often has little to lose by going bankrupt.

In "no funds" cases we are happy to give people an hour's free advice to explain the options to them and point them in the direction of the right websites so they can learn more about the detail. We sometimes recommend the striking-off route where there are negligible or no assets and the liabilities are relatively low.

As regards recommending compulsory or voluntary liquidation, we will explain the process and consequences of each and it is up to the directors to decide what they want to do. Most directors would rather deal with an IP than a "faceless" civil servant and from a costs point of view the secretary of state fee mentioned above often makes the voluntary liquidation preferable.

I don't know whether you have personally had a bad experience with an IP bit you clearly have a deep-seated distrust of the profession - and I respect your right to do so. I am based in Northamptonshire and if you would like to meet up to see how we operate I would gladly accommodate you.