Difficult Situation - Any Way Out?

[Vicki B]

Hi, I need some advice please.

I have a company where sales have dried up due to the current cost of living issues and problems with our website which are not a quick fix. A year ago we were doing £42,000 a month turnover; last month was £8000 with a commensurate drop in profit. Fixed costs the same. Even if we get past the website issues, trading will still be difficult.

It is proving very difficult to see a way to continue. I have read a few forum posts and these are the material facts:

- I have about £6,500 in the bank

- I owe 5 suppliers around £7,000

- The VAT is due in a couple of weeks, probably £3,000

- Last year's Corporation Tax will be around £7,000, due end of the year

- I have a PayPal Working Capital loan balance remaining of £6,900

- A credit card with a personal guarantee, £2,000 balance

- I have an overdrawn director's loan account of £11,500, but this year we have put £14,000 in cash back into the business

- Related to the DLA, there is about £3,800 held by HMRC in Sec 455 tax

- I am a director on PAYE, and I have been paying the minimum salary for NI

Given the above situation, is anyone able to suggest a way out of this mess? My main concern is the DLA - we have put the money back, and the revenue have the SEC 455 tax so what will be the status of this?

Any advice much appreciated.

Regards, Vicki

 

[Robert Moore]

Without going into specifics I can suggest a read of our worried directors guide. https://www.companyrescue.co.uk/worried-director

 

[Chris Parkman]

Hi Vicki

If you have paid money back in that will be offset against your DLA. If it has been repaid in full then the S455 tax will be repayable, but will be offset against other crown debts. Therefore the company is unlikely to receive actual funds back.

The company appears to be insolvent and you should talk to a licensed insolvency practitioner. Most will offer a free first meeting and run through the options. I would be happy to chat to you and I am sure the other IPs on this forum would also be happy to talk through your situation and provide you with options. Alternatively find an IP local to you or one that is recommended by your accountant.

Hope that helps.

 

[Gavin Bates]

Hi

i agree with Chris if you have repaid money to the company and not money out the DLA is not a problem and the s455 will be offset against the other HMRC debts.

It does appear that the company is insolvent. Most IP will offer initial meeting free of charge.

Regards

Gavin

 

[Gyumri]

we have put the money back, and the revenue have the SEC 455 tax so what will be the status of this?

HMRC will not refund it to the company pending receipt of the next tax return due and will then set it off against outstanding tax due.

The chances of you receiving it as a refund is about the same as John Major becoming the next PM.

 

[Lisa Thomas]

The company appears to have enough funds to pay for liquidation. Either via court, known as a compulsory liquidation, or via a Creditors Voluntary Liquidation ("CVL") through a licensed Insolvency Practitioner.

There are pros and cons to each.

More information comparing the two procedures can be found in my video here:

- YouTube

Enjoy the videos and music that you love, upload original content and share it all with friends, family and the world on YouTube.

youtu.be

It sounds as if you were an employee of the company, in which case if you liquidate you may be able to recover monies from the Redundancy Payments office.

More info here:

- YouTube

Enjoy the videos and music that you love, upload original content and share it all with friends, family and the world on YouTube.

youtu.be

If you haven't already spoken to Chris, or Gavin, or would like a second opinion I'd be happy to chat and give you some free advice.

 

[Paul Kelly ICHYB]

My advice would be to find out specifically why sales are drying up and start getting them back!

sales have dried up due to the current cost of living issues

This is an excuse, not a reason!

Start a separate thread and give an overview of your business, what you did and where you see the issues.

Also, if it brought you business, get your website sorted out!

 

[MBE2017]

Further to Paul’s comment above, hard to advise without knowing your profit levels etc, but if you could improve sales and turnover, would you want to continue, or are you wanting to close the business down?

You have to be honest to yourself about this, business is never easy, but you will have to work hard and fight even harder for a while to turn things around, but it is far from impossible. You are not talking of huge amounts atm.

 

[MOIC]

A year ago we were doing £42,000 a month turnover; last month was £8000 with a commensurate drop in profit. Fixed costs the same. Even if we get past the website issues, trading will still be difficult.

Do you have sufficient stock to get to last years turnover levels, or is this a service based industry? There are no stock figures in your opening post.

 

[Vicki B]

Morning.

Thanks for everyone's replies - much appreciated. I have been fighting the good fight, hence the couple of days to reply. I am working hard on analysing and fixing issues.

The situation with the DLA is much clearer, and of course I don't expect to receive a refund in an insolvency situation.

I am pretty sure that there is a slowdown in my industry - the invoice numbers coming from my main suppliers are sequential and I can see that they are way down. My proportion of their orders is similar to previously. This isn't an excuse, just reality.

The other issue in this perfect storm is Google Ads - they made me change campaign types and the results are either inferior to the old type or people literally aren't looking. I called them and they said everything was fine in the campaigns so who knows... Anyway I am on the case with some workarounds. There's always another way.

1st September will be the 20th anniversary of this business - not many can achieve that, I tell myself lol. I have been through so many ups and downs but this feels like a perfect storm. I am going to fight on until the anniversary - 19 years and 11 months shows I'm not a quitter! My partner has a good job so it is now survival mode.

Thanks again. If I need the IP help, I have a note of your names and numbers.

Vicki

 

[MBE2017]

Best of luck Vicki.