Desperate for help or advice!

[jasperc]

Hi Everyone.

I have fallen foul of HMRC re PAYE arrears and they are threatening Distraint on my stock. The amount involved is c.£14,000 of which I have c.£3000. My stock which is 95% paid for has cost around £80,000. If they seize it and Auction it off, it will probably make 10% of this as it is very specialised and of no use or interest to the public. It will also mean I will have to close the business, get rid of 3 loyal staff and I we will have to go on State Benefits.A Nightmare. I have had my business since 1978. I am 65 with a wife and three children. I am not a criminal, have never robbed or cheated anyone. I have just fallen victim of circumstances largely out of my control!

Because of ill health and not being able to work for long periods (No work -no pay!) I have maxed out my credit cards and overdraft facility. Also my Credit File which was Very Good for over 30 years is now blighted by one or two late/missed payments and 2 defaults.

I am currently selling a property (under offer) in the UK for £155.000 (95,000 equity) and I also have the deeds of a fully paid up Apartment in Spain.

My bank have said 'they will consider a bridging loan when I have Exchanged Contracts' on the UK property. I do have an offer and contracts are being drawn up right now. But I fear I will run out of time before I see any cash.

My question really is. Does anyone know if a Pawn Broker or similar would consider Spanish Title Deeds as Security on say a loan of £10,000? I suspect the HMRC will Distraint in the next few days and then I will have 5 Calendar days to come up with the full amount, plus Bailiff fees.

The apartment is currently on the market at 90,000 Euros and I have paid for it in full.

Any help or advice would be very welcome. Thanks

 

[engcc]

I think if you explained what you have said on this forum to HMRC then they would be more willing to come to some kind of arrangement. You obviously have the assets to cover this debt so there shouldn't be a problem.

 

[jasperc]

Thanks for that. I have tried to negotiate with HMRC over this and did have a Payment Plan in place. Unfortunately because of my ongoing health prblems I was unable to keep to it. As I have said if I cannot work...I do not earn. They refuse to negotiate further.

I have various health issues including Type 2 Diabetes, which I suspect was undetected for a long while. This has affected my eyesight. Some days I cannot view a computer screen, read correspondence and certainly cannot do my work, which requires very good eyesight. The condition has also left me exhausted. Many days I wake up and feel as though I have just completed a 12 hour shift in a coal mine!

 

[engcc]

Thanks for that. I have tried to negotiate with HMRC over this and did have a Payment Plan in place. Unfortunately because of my ongoing health prblems I was unable to keep to it. As I have said if I cannot work...I do not earn. They refuse to negotiate further.

I have various health issues including Type 2 Diabetes, which I suspect was undetected for a long while. This has affected my eyesight. Some days I cannot view a computer screen, read correspondence and certainly cannot do my work, which requires very good eyesight. The condition has also left me exhausted. Many days I wake up and feel as though I have just completed a 12 hour shift in a coal mine!

Sounds like a scare tactic from HMRC to me, spongebob on this forum seems to be the expert in this area. Look him up

 

[jasperc]

Sounds like a scare tactic from HMRC to me, spongebob on this forum seems to be the expert in this area. Look him up

No scare tactics. They have already served me with one Destraint Notice earlier this year, when they took an inventory of my stock. I was also visited by the Auctioneers. Fortunately I was able to find the amount to pay them, within the 5 calendar days by borrowing from my son. This is not an option this time.......

 

[johndunning]

HMRC do have a human side sometimes and if you get the right person you may get some help.

Don't try playing for sympathy because everybody nowadays has problems and the fact is, if you owe it to HMRC, you have to pay it.

Call them, be polite and courteous and explain the financial situation. Offer to send some money now and the rest as soon as you can.

If the worst comes to the worst, can't you sell some of your stuff on eBay?

 

[jasperc]

HMRC do have a human side sometimes and if you get the right person you may get some help.

Don't try playing for sympathy because everybody nowadays has problems and the fact is, if you owe it to HMRC, you have to pay it.

Call them, be polite and courteous and explain the financial situation. Offer to send some money now and the rest as soon as you can.

If the worst comes to the worst, can't you sell some of your stuff on eBay?

Thanks for that.

I am always polite and courteous to everyone. The HMRC is no exception. I am not trying to gain sympathy, just good advice. I am merely telling it as it is to fill in the background to this. The response from HMRC is to question why my staff cannot keep the business running profitably, whilst I am unable to participate...........If it were only that simple. I have 40 years experience/skill in my field. Not something that I can pass on readily.

I already have 880 listings on ebay. .........I think I have sold 5 items in the last month!!

 

[johndunning]

I'm just coming up with ideas.

When you're going through all this, it can be scary and depressing.

Have you spoken to your accountant. Are you a Ltd company?

If you can't afford the bill then surely you are insolvent?

Perhaps you could liquidate the business, form another one, transfer the assets and kill the company.

Frowned upon, and you have to be careful, but a possible escape route.

 

[jasperc]

I'm just coming up with ideas.

When you're going through all this, it can be scary and depressing.

Have you spoken to your accountant. Are you a Ltd company?

If you can't afford the bill then surely you are insolvent?

Perhaps you could liquidate the business, form another one, transfer the assets and kill the company.

Frowned upon, and you have to be careful, but a possible escape route.

If you had read my OP you will see I am far from being insolvent. I have equity of over £250k in 3 properties I own, I also have £80,000 of stock of which I have already paid perhaps £76,000.

I am a Sole Trader and have been in the same business for 35 years.

The problem I do not have any available cash and my borrowing capacity has been hugely reduced by recent events.....1.e Maxed out Credit Cards and diminished Credit Rating.

I am only on this board to ask if someone knows if I can use my Spanish Property Deeds, which are free of Charges and encumbrance, as security with a Pawnbroker or similar..............?

 

[Walkol]

I am only on this board to ask if someone knows if I can use my Spanish Property Deeds, which are free of Charges and encumbrance, as security with a Pawnbroker or similar..............?

Sorry to state the obvious, but why not phone one and ask?

 

[Alan R Price]

If you had read my OP you will see I am far from being insolvent. I have equity of over £250k in 3 properties I own, I also have £80,000 of stock of which I have already paid perhaps £76,000.

I am a Sole Trader and have been in the same business for 35 years.

The problem I do not have any available cash and my borrowing capacity has been hugely reduced by recent events.....1.e Maxed out Credit Cards and diminished Credit Rating.

I am only on this board to ask if someone knows if I can use my Spanish Property Deeds, which are free of Charges and encumbrance, as security with a Pawnbroker or similar..............?

I can't answer the question about pawnbrokers although my understanding is that they are only legally allowed to accept chattel assets (i.e. moveable physical items as opposed to real property) as pledges. I may be wrong.

Have you thought about selling all or part of the business or getting a third party in to run it while you cannot? It seems you are relying on the stock being sold to pay your debts but if you are not well enough to work, that's not going to happen, so perhaps it's better to give up part of the business and retain a good part of your assets, rather then lose the whole lot.

An alternative solution might be to sell the business and its assets to a limited company you own. Ownership would pass so HMRC could not distrain. The deal could be structured to allow for instalment payments from future profits. Of course you would have to sell for proper market price. Once in a limited company you could possibly obtain stock finance or factor the company's debts to free up cash to settle the tax debt. It does however depend on your ability to continue working and if you cannot guarantee this is going to be possible in the short term, you might be better off simply selling up while the business still has some value.

As regards insolvency, there are two definitions: liabilities in excess of assets; or inability to pay one's debts as they fall due. Only one of these has to be satisfied, so on the basis of the above, a court would consider you insolvent. You therefore need to act now to avoid the possibility of the distraint continuing or worse, being made bankrupt - as you say, you are maxed-out on your cards. I suggest you speak to an insolvency practitioner. A good one will give you an hour's free advice so you understand what your risks/options are.

 

[businessfunding]

It is not terribly easy to raise bridging on property - particularly non-UK property.

Do you have any othe business or personal assets you could secure against?

invoices
confirmed orders
vehicles
Plant & equipment
Art / valuables

There might be options out there.

feel free to PM.

 

[alexft]

I know one pawnbroker in Portugal, perhaps if its easy to do paperwork wise he can do it. For more info simply send pm.

On another note have you considered selling business to someone?

 

[jasperc]

Sorry to state the obvious, but why not phone one and ask?

Yes It is obvious!.........and I have already done it. The ones I have contacted (maybe 30) have all said they only lend on 'tangibles' ie Jewellery, God, Silver, Rolex's etc

I was hoping someone on this forum may know a more adventurous lender!

 

[jasperc]

Yes It is obvious!.........and I have already done it. The ones I have contacted (maybe 30) have all said they only lend on 'tangibles' ie Jewellery, God, Silver, Rolex's etc

I was hoping someone on this forum may know a more adventurous lender!

Sorry........That should have been Gold NOT God!

 

[jasperc]

I can't answer the question about pawnbrokers although my understanding is that they are only legally allowed to accept chattel assets (i.e. moveable physical items as opposed to real property) as pledges. I may be wrong.

Have you thought about selling all or part of the business or getting a third party in to run it while you cannot? It seems you are relying on the stock being sold to pay your debts but if you are not well enough to work, that's not going to happen, so perhaps it's better to give up part of the business and retain a good part of your assets, rather then lose the whole lot.

An alternative solution might be to sell the business and its assets to a limited company you own. Ownership would pass so HMRC could not distrain. The deal could be structured to allow for instalment payments from future profits. Of course you would have to sell for proper market price. Once in a limited company you could possibly obtain stock finance or factor the company's debts to free up cash to settle the tax debt. It does however depend on your ability to continue working and if you cannot guarantee this is going to be possible in the short term, you might be better off simply selling up while the business still has some value.

As regards insolvency, there are two definitions: liabilities in excess of assets; or inability to pay one's debts as they fall due. Only one of these has to be satisfied, so on the basis of the above, a court would consider you insolvent. You therefore need to act now to avoid the possibility of the distraint continuing or worse, being made bankrupt - as you say, you are maxed-out on your cards. I suggest you speak to an insolvency practitioner. A good one will give you an hour's free advice so you understand what your risks/options are.

Thanks for that comprehensive reply Alan.

I have to admit to not knowing of the two definitions of Insolvency. I always assumed, wrongly, it seems, that if you have more assets than liabilities you were Solvent.

It is certainly true that I am often struggling to meet my commitments, but surely that is true of probably 80% of small businesses at this present time!

I will explore the options you have mentioned. But we are really talking about a tempory hiatus in my cash flow.

 

[ScottishInvestments]

I was going to suggest you could sell some of your stock to a rival at a discounted rate just to get you out the woods?

It's a difficult one!

ScotInvest

 

[jasperc]

I was going to suggest you could sell some of your stock to a rival at a discounted rate just to get you out the woods?

It's a difficult one!

ScotInvest

Thanks for your suggestion. Alas I have already tried..........It seems, if they are to be believed, that my rivals are in the same or worse position than me.

There have certainly been a few closures in my region.

It's a bloodbath out there! I am in a non essential trade and one of the first to suffer in a downturn......and one of the last to recover.

I have traded through 2 or three past recessions, but nothing like this one. Oh Sorry! I forgot. We are NOT in recession anymore! PMSL

 

[David A]

I am a Sole Trader and have been in the same business for 35 years.

That's your problem - you have no limited liability, as all your personal wealth you have built up over the years is available to your creditors.

HMRC are perfectly aware of this, hence their tough stance.

I see no other way than trying anything you can to raise cash.

As soon as you get over this problem, get the protection of a limited company around you - particularly as you have employees.

 

[jasperc]

That's your problem - you have no limited liability, as all your personal wealth you have built up over the years is available to your creditors.

HMRC are perfectly aware of this, hence their tough stance.

I see no other way than trying anything you can to raise cash.

As soon as you get over this problem, get the protection of a limited company around you - particularly as you have employees.

Thanks for that. Sound advice. I will get on to my Accountant tomorrow to see about setting up a Limited Company. I may even be able to save some CG liability on the impending sale of my UK freehold as well.....If I put the proceeds into/lend the new company.

I have plenty of 'bricks and mortar', but no readily available cash.....

HMRC are my biggest Creditor and I have no problems with anyone else.

 

[Alan R Price]

Jasper

Have a look at this: http://www.r3.org.uk/index.cfm?page=1204. If you cannot obtain an extension from HMRC this might be your final option. Sometimes they will only agree an IVA (as opposed to time-to-pay) because it involves an independent third party to monitor the situation. It is costly but could gain you the time you need to realise sufficient assets to discharge your debts and avoid the "meltdown" of bankruptcy. An IVA would encompass all your debts so all pressure on your finances would be eased.

 

[jasperc]

Jasper

Have a look at this: If you cannot obtain an extension from HMRC this might be your final option. Sometimes they will only agree an IVA (as opposed to time-to-pay) because it involves an independent third party to monitor the situation. It is costly but could gain you the time you need to realise sufficient assets to discharge your debts and avoid the "meltdown" of bankruptcy. An IVA would encompass all your debts so all pressure on your finances would be eased.[/QUOTE

Thanks Alan. I will take a look at the website.

 

[jasperc]

Thanks for that Alan. I will take a look.