Final decision on Sponge Bob.

Discussion in 'Insolvency' started by Bay, Nov 20, 2019.

  1. Adam93

    Adam93 UKBF Regular Free Member

    360 71
    The company should use an IP if it has funds to do so. The 'sponge bob' method is only relevant if the company is penniless and can't afford an IP.

    Just because you don't appoint an IP, doesn't mean a creditor won't. At least if you appoint an IP you will be able to choose them. If a creditor appoints an IP (which is a possibility due to the level of debts) then they choose.

    Ask your accountant for an up to date DLA balance, repay the company that amount and then appoint an IP with the cash in the bank - this would be the 'proper' way to do things.
     
    Posted: Nov 26, 2019 By: Adam93 Member since: Jan 18, 2018
    #21
  2. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,592 2,411
    You could always start a new post "Would you recommend your old IP"
    There are lots of Ceased businesses posting on this forum
     
    Posted: Nov 26, 2019 By: Chris Ashdown Member since: Dec 7, 2003
    #22
  3. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    The Director should be able to reach an agreement with the proposed Liquidator as to the DLA before Liquidation so will have some comfort as to where they stand before they push the go button (as long as the IP does become Liquidator).
     
    Posted: Nov 27, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #23
  4. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    How are you going to pay the income tax charge on £40K + if your DLA does get wiped using the dissolution process?

    Are you going to have a personal tax debt problem
     
    Posted: Nov 27, 2019 By: UK Contractor Accountant Member since: Sep 18, 2013
    #24
  5. Bay

    Bay UKBF Contributor Free Member

    64 3
    Its company debt for VAT / PAYE. My DLA overdraft is nothing like that if at all Depending on work in progress/stock etc).
     
    Posted: Nov 27, 2019 By: Bay Member since: Mar 6, 2019
    #25
  6. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

    4,985 869
    if the company owes £50K approx in tax debts and has no assets to realise then what you accountant is saying is correct in that the an appointed IP will try to classify the £50K as overdrawn DLA.

    Unless of course you have made trading losses which has caused the insolvency.
     
    Posted: Nov 27, 2019 By: UK Contractor Accountant Member since: Sep 18, 2013
    #26
  7. Bay

    Bay UKBF Contributor Free Member

    64 3
    Thanks for everyone's input.

    I do not have a penny to pay for IP upfront which is the main problem. They have said they would do it on a PG.
    Yes it’s trading loss. Otherwise I would have taken 50k on top of my wages. Which I haven’t.
     
    Posted: Nov 27, 2019 By: Bay Member since: Mar 6, 2019
    #27
  8. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    You never answered the part about mortgage your house to pay off IP
     
    Posted: Nov 27, 2019 By: Chris Ashdown Member since: Dec 7, 2003
    #28
  9. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,519 446
    You don't always have the pay the IP upfront - as I have said you can often pay the DLA back in installments and the IP effectively gets paid from the DLA.
     
    Posted: Nov 28, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #29
  10. Bay

    Bay UKBF Contributor Free Member

    64 3
    Re-mortgaging would be ideal to pay the overdraft. However, I can't imagine I'm particularly attractive to lenders at the moment...

    Presumably, in paying of overdraft from oldco (in the future) it's not tax-deductible from newco or my personal tax? Is there a way to avoid tax in this instance?
     
    Posted: Nov 28, 2019 By: Bay Member since: Mar 6, 2019
    #30
  11. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,519 446
    Posted: Nov 28, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #31
  12. Bay

    Bay UKBF Contributor Free Member

    64 3
    I'm still struggling to make this decision. I'm leaning towards using an IP and biting the bullet. It seems in doing so I will avoid stress and sleep better. It's tempting to take the risk and leave it to creditors but I guess you don't know how that will go. In the SpongeBob plan, it seems the official receiver is not that involved but perhaps if affairs are more of a mess and larger sums then this might not be the case?
     
    Posted: Nov 28, 2019 By: Bay Member since: Mar 6, 2019
    #32
  13. Bay

    Bay UKBF Contributor Free Member

    64 3
    Posted: Nov 28, 2019 By: Bay Member since: Mar 6, 2019
    #33
  14. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    I don't give tax advice but can't see how you can get personal tax relief for paying off a creditor.

    Your personal accountants need to advise you about this.
     
    Posted: Nov 28, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #34
  15. Ian J

    Ian J Factoring Specialist Full Member - Verified Business

    6,057 1,966
    No
     
    Posted: Nov 28, 2019 By: Ian J Member since: Nov 6, 2004
    #35
  16. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    In my own case, I talked to the bank part that had taken over the PG after closing the account and sold my car that raised about 1/6 of what was owed and offered it in full and final settlement of the pg, after no conversations for about 6 weeks they wrote back and accepted, I did hint it was either that or bankruptcy.

    I did have enough company assets for the IP to be happy to liquidate the company without further funds
     
    Posted: Nov 28, 2019 By: Chris Ashdown Member since: Dec 7, 2003
    #36
  17. Mr D

    Mr D UKBF Legend Free Member

    22,888 2,757
    Could ask that Jeremy guy if he can make some new tax rules up that allow you to. If he gets into number 10 donning steet.
     
    Posted: Nov 28, 2019 By: Mr D Member since: Feb 12, 2017
    #37
  18. Bay

    Bay UKBF Contributor Free Member

    64 3
    Hi Chris,

    That's very intriguing to hear - did you have equity in a house? I would have thought they would be after that as leverage?

    Thanks,
     
    Posted: Nov 29, 2019 By: Bay Member since: Mar 6, 2019
    #38
  19. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,592 2,411
    No, I had a solicitor sort out changing the house over to the wife from a joint ownership a couple of weeks before, I had to sign a PG of the lease of the shop, which was the best free advice i found on this forum

    I understand that if you reassign ownership of any asset after you have a PG, then in bankruptcy they may claim this is not allowed if within say a 5 year period and claim half the asset value
     
    Posted: Nov 29, 2019 By: Chris Ashdown Member since: Dec 7, 2003
    #39
  20. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,592 2,411
    The banks dilemma is , to get a reduced amount of cash in hand, or the full amount spread over many years with a good risk they may get next to nought
     
    Posted: Nov 29, 2019 By: Chris Ashdown Member since: Dec 7, 2003
    #40