How is Sole Trader insolvency classed?

[AlanD]

Hello.

If a sole trader is deemed insolvent, is this classed as business or personal insolvency (UK law)?

Thank you

 

[Frank Wessely]

Hello.

If a sole trader is deemed insolvent, is this classed as business or personal insolvency (UK law)?

Thank you

Hi, it is technically a personal insolvency procedure. Either a bankruptcy or an individual voluntary arrangement (IVA). That will depend on the underlying circumstances and the degree to which the insolvent sole trader wishes to retain control over their financial affairs.

For very low levels of personal debts and no assets there is also the debt relief order.

Thanks.

 

[DontAsk]

Hello.

If a sole trader is deemed insolvent, is this classed as business or personal insolvency (UK law)?

Thank you

It's personal. As a sole trader you are the business.

 

[ChrisCallaghan]

Hello.

If a sole trader is deemed insolvent, is this classed as business or personal insolvency (UK law)?

Thank you

To help answer your question in more detail, can I ask what the context is? Are you a sole trader struggling with debt? Does a sole trader owe you money?

 

[Lisa Thomas]

If a sole trader subject to an insolvency procedure in the UK, they are either Bankrupt, in an IVA, subject to a Debt Relief Order, or subject to a Debt Management Plan.

They could also be in a Breathing Space Moratorium whilst they sort out their affairs and plan for one of the above..

The most common suspects are Bankruptcy or an IVA.

If you, or someone you know needs advice Stepchange is a good starting point. They are a charity and give advice for free:

StepChange Debt Charity. Free Expert Debt Help & Advice

 

[JEREMY HAWKE]

To help answer your question in more detail, can I ask what the context is? Are you a sole trader struggling with debt? Does a sole trader owe you money?

OP is asking for a friend

 

[AlanD]

Thank you for your answers.

I am a working on training material for a client and have found an insolvent sole trader being serviced by a company that mentions Business Insolvency in their logo. This has caused confusion as a sole trader is personally liable for a business failure.

My task is to explain either sole trader insolvency as personal, or as business. I can't have a grey area in the explanation.

 

[ChrisCallaghan]

I see your problem.

Ultimately, sole traders facing financial difficulties would require personal insolvency solutions, examples as given by Frank & Lisa.

However, an insolvency practice may still list 'services for business' in reference to sole traders.

For example, though my firm no longer offers debt advice services for sole traders, we used to. Though the solutions are personal insolvency solutions, we still listed as services for businesses.