Compulsory Winding Up - Should I ask for this?

[HelpNeeded25]

Thank you in advance for reading this, I’ve read a lot of threads on here over the last few months and I appreciate those who give their advice.

I have run a limited company for the last 7 years but have reached the end of the road and I quite literally don’t know where to turn next.

My business ran craft classes and did quite well up until Covid and then with ongoing closures a backlog of bookings to honour and reduced space it went sour. We weren’t eligible for grants as we were classed as “education” not leisure or hospitality or shop. I took a bounce back loan and tried to pivot the company and kept it going as best I could for another few years, however I hadn’t taken a wage out for the last year, and had to make all my staff redundant and literally worked to pay their redundancy. I then tried to carry the business myself teaching alone but last year suffered some health issues that meant I couldn’t work for periods of time which again impacted the income. In the end I delivered all the booked classes so no customers were outstanding, but our landlord asked me to surrender the lease as we were behind on rent which I did in Nov 24. I was then planning to try and find another smaller premises to run the business but I haven’t been able to find anywhere and my health issues have worsens. We have no real assets as it was a service business, the small number of materials we used/chairs tables etc are in storage which I can’t afford to keep for much longer and anything else (of no value) was skipped when we gave up the lease.

So I have a business that owes approx £30k BBL to NatWest and around £12k in overdue VAT. Our accounts are now overdue and I can’t afford to pay for them to be done. The business owes me money too as it’s bled me dry of everything (my own decisions I know) but I just want to be free of it, I can’t sleep at night and am currently pregnant and it’s scaring me silly thinking someone is going to come and knock on my door.

I genuinely can’t afford liquidation, there is -££ in the business. I’ve managed to get a part time job and am retraining (mature student) for a future career but I earn a few hundred a month which I’m obviously struggling to live off. I don’t own a property or even my own car!

Companies House applied for a strike off because our accounts are late but someone (I can’t see who but assume the bank or HMRC) have opposed it so it’s been cancelled.

Am I best to write to Companies House to all explain this? Or should I write to NatWest and HMRC and ask them for a compulsory winding up order? Any advice you have would be really appreciated. Thank you again.

 

[ChrisCallaghan]

Hi @HelpNeeded25 and welcome to UKBF.

I'm sorry to hear about the situation you find yourself in. If funding a voluntary liquidation is out of the question, then....

Or should I write to NatWest and HMRC and ask them for a compulsory winding up order?

.... this . Currently banks are not coming forward to wind up companies unless they suspect fraud in relation to BBLs, so HMRC would be your best hope.

If you would like help with the wording, the following template from a debt charity will be helpful: https://businessdebtline.org/sample-letters/considering-strike/

Am I best to write to Companies House to all explain this?

Save your energy, there's nothing Companies House can do to assist you at this time.

Now that the strike of action has been objected, the company will remain in this limbo state till a creditor comes forward to wind.

Out of curiosity, what sort of quotes have you had for a liquidation?

 

[Lisa Thomas]

Am I best to write to Companies House to all explain this?

No - they won't be able to assist.

Or should I write to NatWest and HMRC and ask them for a compulsory winding up order?

As part of the dissolution process you can invite them to liquidate the company but it's unlikely they would, based on your circumstances.

Any advice you have would be really appreciated. Thank you again.

Have you spoken to an IP? That's your best first step. I'd be happy to chat and give you free, confidential, no obligation advice to ensure dissolution is the best option.

 

[HelpNeeded25]

Hi @HelpNeeded25 and welcome to UKBF.

I'm sorry to hear about the situation you find yourself in. If funding a voluntary liquidation is out of the question, then....


.... this . Currently banks are not coming forward to wind up companies unless they suspect fraud in relation to BBLs, so HMRC would be your best hope.

If you would like help with the wording, the following template from a debt charity will be helpful:


Save your energy, there's nothing Companies House can do to assist you at this time.

Now that the strike of action has been objected, the company will remain in this limbo state till a creditor comes forward to wind.

Out of curiosity, what sort of quotes have you had for a liquidation?

Thank you Chris, I have drafted a letter to send to HMRC and NatWest. May I ask as the business has ceased trading for over 3 months, do I need to write to them first and give my intention to apply for Strike Off or can I fill out the Strike Off form and send them a copy along with the letter?

I was quoted anywhere between £3k - £8k but when I say I have no funds, I really do mean it. If I could pay to get this all sorted and stop it hanging over my head I really would. But I’ve effectively been living on well under min wage for the last few years putting my personal expenses on my credit cards trying to limp the business through. I just don’t have it so I believe this is my only option.

 

[HelpNeeded25]

No - they won't be able to assist.


As part of the dissolution process you can invite them to liquidate the company but it's unlikely they would, based on your circumstances.



Have you spoken to an IP? That's your best first step. I'd be happy to chat and give you free, confidential, no obligation advice to ensure dissolution is the best option.

Thank you Lisa, I appreciate your reply.

If neither NatWest or HMRC will apply for compulsory winding up, what will happen? Will it just sit in limbo for years? I have no intention of becoming a company director ever again but the stress of the unknown is difficult.

I have yes, please see my reply above. I appreciate the offer, but I don’t want to waste your time with my £0 budget! Thanks again.

 

[japancool]

So I have a business that owes approx £30k BBL to NatWest and around £12k in overdue VAT. Our accounts are now overdue and I can’t afford to pay for them to be done. The business owes me money too as it’s bled me dry of everything (my own decisions I know) but I just want to be free of it, I can’t sleep at night and am currently pregnant and it’s scaring me silly thinking someone is going to come and knock on my door.

Taking what you've posted at face value, you can more or less stop worrying.

The HMRC and BBL debts belong to the company, not you. As long as you haven't done anything illegal with your BBL (i.e. withdrawn it all to your personal bank account and gone on a bender to Tenerife), there's nothing to fear. The only thing to be concerned with would be any loans for which you have put up a personal guarantee.

Have a read of this:

When can a director be held personally liable for company debts

If a company is struggling and fails then the directors of the limited company will not normally be held liable for the debts of the company.

business-insolvency-helpline.co.uk

Unless any of the above apply, there won't be any people turning up at your door, so you can rest easy. In any case, they would need a court order against you personally, rather than the business.

Disclaimer - I am not an IP, and the above is based on personal experience, and shouldn't necessarily be relied upon.

Did you have an overdrawn Director's Loan Account?

 

[Elliot Green]

Thank you in advance for reading this, I’ve read a lot of threads on here over the last few months and I appreciate those who give their advice.

I have run a limited company for the last 7 years but have reached the end of the road and I quite literally don’t know where to turn next.

My business ran craft classes and did quite well up until Covid and then with ongoing closures a backlog of bookings to honour and reduced space it went sour. We weren’t eligible for grants as we were classed as “education” not leisure or hospitality or shop. I took a bounce back loan and tried to pivot the company and kept it going as best I could for another few years, however I hadn’t taken a wage out for the last year, and had to make all my staff redundant and literally worked to pay their redundancy. I then tried to carry the business myself teaching alone but last year suffered some health issues that meant I couldn’t work for periods of time which again impacted the income. In the end I delivered all the booked classes so no customers were outstanding, but our landlord asked me to surrender the lease as we were behind on rent which I did in Nov 24. I was then planning to try and find another smaller premises to run the business but I haven’t been able to find anywhere and my health issues have worsens. We have no real assets as it was a service business, the small number of materials we used/chairs tables etc are in storage which I can’t afford to keep for much longer and anything else (of no value) was skipped when we gave up the lease.

So I have a business that owes approx £30k BBL to NatWest and around £12k in overdue VAT. Our accounts are now overdue and I can’t afford to pay for them to be done. The business owes me money too as it’s bled me dry of everything (my own decisions I know) but I just want to be free of it, I can’t sleep at night and am currently pregnant and it’s scaring me silly thinking someone is going to come and knock on my door.

I genuinely can’t afford liquidation, there is -££ in the business. I’ve managed to get a part time job and am retraining (mature student) for a future career but I earn a few hundred a month which I’m obviously struggling to live off. I don’t own a property or even my own car!

Companies House applied for a strike off because our accounts are late but someone (I can’t see who but assume the bank or HMRC) have opposed it so it’s been cancelled.

Am I best to write to Companies House to all explain this? Or should I write to NatWest and HMRC and ask them for a compulsory winding up order? Any advice you have would be really appreciated. Thank you again.

The problem is the requirement to file accounts persists notwithstanding the strike off position dragging on. It is technically an offence for a company director not to file accounts.

 

[JEREMY HAWKE]

Taking what you've posted at face value, you can more or less stop worrying.

The HMRC and BBL debts belong to the company, not you. As long as you haven't done anything illegal with your BBL (i.e. withdrawn it all to your personal bank account and gone on a bender to Tenerife), there's nothing to fear. The only thing to be concerned with would be any loans for which you have put up a personal guarantee.

Have a read of this:

When can a director be held personally liable for company debts

If a company is struggling and fails then the directors of the limited company will not normally be held liable for the debts of the company.

business-insolvency-helpline.co.uk

Unless any of the above apply, there won't be any people turning up at your door, so you can rest easy. In any case, they would need a court order against you personally, rather than the business.

Disclaimer - I am not an IP, and the above is based on personal experience, and shouldn't necessarily be relied upon.

Did you have an overdrawn Director's Loan Account?

I do agree with this and you are practically on the Spongbob plan route dispite not actually following it (something I would not normally recommend)
Your best route maybe simply to do nothing The question is what have you got to lose?

 

[HelpNeeded25]

Taking what you've posted at face value, you can more or less stop worrying.

The HMRC and BBL debts belong to the company, not you. As long as you haven't done anything illegal with your BBL (i.e. withdrawn it all to your personal bank account and gone on a bender to Tenerife), there's nothing to fear. The only thing to be concerned with would be any loans for which you have put up a personal guarantee.

Have a read of this:


Unless any of the above apply, there won't be any people turning up at your door, so you can rest easy. In any case, they would need a court order against you personally, rather than the business.

Disclaimer - I am not an IP, and the above is based on personal experience, and shouldn't necessarily be relied upon.

Did you have an overdrawn Director's Loan Account?

Thank you. No, no exotic holidays and no overdrawn DLA, the business owed me money. I don’t really have any other choice but to proceed this way, and I don’t have any personal guarantees so I need to hope it will eventually resolve.

 

[Lisa Thomas]

Thank you Lisa, I appreciate your reply.

If neither NatWest or HMRC will apply for compulsory winding up, what will happen? Will it just sit in limbo for years? I have no intention of becoming a company director ever again but the stress of the unknown is difficult.

I have yes, please see my reply above. I appreciate the offer, but I don’t want to waste your time with my £0 budget! Thanks again.

Yes it will sit in limbo until companies house strikes it off for non filing.

For more info see here:

Guidance for limited companies, partnerships and other company types

Guidance about registering, filing and disclosing information with Companies House.

www.gov.uk

and one of the final chapters here:

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