IP blocking Directors redundancy

[benjy365]

This is a frustrating one that I can't seem to get past.

My business became insolvent over a year ago and we appointed a very well known large scale firm to be our insolvency practitioners, for a fee of £15k plus VAT.

The process has been very slow but there is nothing really problematic and so I have moved on with my life. A short while after the process started I was made aware that I may be eligible for Directors Redundancy and after a quick google I ended up talking to a company who would do everything for me and I would be supposedly entitled to just over £4k after their fees.

The problem has now come up that the person dealing with our insolvency at the IP's won't sign off the form thats needed to apply. He has said to me that he 'has never heard of such a thing' and basically implied that its wrong for me to claim this after my business went bust owing lots of money.

Despite numerous chases I just cant get anywhere and time is ticking on, this wasn't made any easier by covid-19 as my contact there was furloughed for a while. This isn't the actual named IP on the case, its one of his staff, the actual named IP doesn't ever respond to emails from me and I just get directed to this staff member.

Now if I had a massively overdrawn Directors loan account I could understand it but due to the fact that I pumped money into the business to try and keep it going my loan account is actually in credit by more than £20k.

Is there anything I can do about this other than just keep complaining? These IP's have basically treated us like dirt since the very second we signed the paperwork after fawning all over us before that!

 

[Gavin Bates]

Hi

I am a bit confused by the story and sorry that you found yourself in this position. So below are a few questions.

First of all you didn’t need to employ a firm to help you claim. Any director who was also an employee can make a claim against the redundancy payments fund.

how much did you pay yourself through PAYE?

which form do you need signing?

have you considered a complaint against the IP’s regulatory body. It may saying you are unhappy and unless you get clear answers to you questions you wil make a formal complaint.

hope this helps.

regards

Gavin

 

[UK Contractor Accountant]

Probably a sticking point for Directors redundancy claim -was there a contract of employment?

 

[Lisa Thomas]

Hi The IP has a duty to lodged the RP14 and RP14A with the Redundancy Payments Office to enable them to process all employee claims.

Have the Liquidators decided that your claim is invalid? This is of course very different from saying they have never heard of the scheme...

The scheme has been going for as long as I can remember so they should have heard of this - is this a trainee you are dealing with?

You need to write a formal complaint and if unsatisfied make a complain here:

https://www.gov.uk/complain-about-insolvency-practitioner

If any further issues with your claim being accepted then I can recommend an agent who can assist with your claim.

 

[Robert Moore]

You can only legitimately claim for directors redundancy if you had a contract of employment and had paid yourself via PAYE. In our experience, this is very rarely the case. This is being cracked down on as some agents have persuaded the directors to "find" that contract and it has magically appeared.

 

[Lisa Thomas]

An agent previously posted they are able to help produce a employment contract and it is not in breach of the rules. I will see if I can find the post and add the link.

 

[Lisa Thomas]

@Caroline Thomas can you advise please?

 

[Chris Ashdown]

When did this change as we went insolvent and the IP satated I did not qualify for redundancy although sole director for 15 odd years and always paid by PAYE company called in IP in 2017

 

[Lisa Thomas]

Chris, It hasn't changed for about 10 years...

 

[UK Contractor Accountant]

Chris, It hasn't changed for about 10 years...

Seems like some liquidators don't even know the rules for Directors claiming redundancy pay from the RPO.

 

[UK Contractor Accountant]

Proving your status as an employee
To receive statutory redundancy payments following the liquidation of a company, directors must be able to prove that they had more than just an advisory or non-executive role in the running of the business. To do this, they must complete a form provided by the Insolvency Service that asks for details about:

• whether a contract of employment was in place
• if the director worked at least 16 hours a week
• whether the company has been incorporated for more than two years
• the details of the directors’ day-to-day responsibilities in the running of the company

If the company director can prove to the liquidator that they had a practical and ongoing role in the running of the company, took a salary using the PAYE scheme and had a similar relationship to the company as other employees, they may be eligible for statutory payments.

What type of contract was in place?
The type of employment contract that existed between a director and the company can have some bearing on how their status will be viewed by the liquidator. One of the first questions a liquidator will ask is what type of contract of employment existed – whether it’s written, oral or implied.

It is easiest to prove a director’s status as an employee where the contract was written, but a contract does not have to be written down to be legal. If, following discussions with the board, a director works similar hours to an employee, is paid through PAYE and has a similar relationship to the business, this oral or implied contract can still be sufficient for statutory entitlements to be paid. However, it will be more difficult to prove, and the liquidator will look at every aspect of the relationship before making a decision.

The key lesson here for directors is to make sure that you can easily prove your employment by having a contract of employment in force.

 

[Chris Ashdown]

Many thanks

Can I assume that when you contract the IP to liquidate the company, the IP has a duty of care for the employees, including advice on things like the government redundancy services

 

[Chris Ashdown]

Presume there would be a cut off date for claims of redundancy and after nearly three years that would be will past the sell by date

 

[Lisa Thomas]

The IP should have asked the Company to complete an RP14 with details of all employees on it. if you considered yourself to be an employed, owed money by the Company, the person that completed it should have included yourself on the form.

Did they provide you/the Company with a form to fill in for all employee details?

There is a 6 month deadline but it is worth seeing if they can make an exception. Alternatively you might have a claim against the Liquidators and should take it up with them.

 

[Chris Ashdown]

Thanks lisa, No I was informed by the IP that I could not claim as a sole director so I just filled in the names etc of the other employees

Whilst i did not have a written contract, i did work full time from 2003 to 2017 all on PAYE

With so much going on I never thought to question the advice as they are a very large and well known accountancy company in Norfolk and the IP was a Partner

 

[Lisa Thomas]

I think you should revert back to the IP and challenge their advice.

If you cannot resolve this you can consider making a complaint against them here:

https://www.gov.uk/complain-about-insolvency-practitioner

 

[Chris Ashdown]

Thanks lise I have already contacted them by email and waiting for a reply, also contacted [email protected] to ask for advice though fully expect out of time for them so IP is the best chance

 

[JeremySilva]

The problem has now come up that the person dealing with our insolvency at the IP's won't sign off the form thats needed to apply. He has said to me that he 'has never heard of such a thing' and basically implied that its wrong for me to claim this after my business went bust owing lots of money.

Despite numerous chases I just cant get anywhere and time is ticking on, this wasn't made any easier by covid-19 as my contact there was furloughed for a while. This isn't the actual named IP on the case, its one of his staff, the actual named IP doesn't ever respond to emails from me and I just get directed to this staff member.

@benjy365

• As you say, it is effectively possible for IPs to block redundancy claims because if the IP doesn't submit info supporting the claim to the RPS or indicates to the RPS that they don't agree with the claim the RPS are unlikely to be able to move it forward.
• If your contact was furloughed someone else should have had responsibility for the case instead. It shouldn't have been left in limbo for weeks at a time. Ultimately the IP remains responsible throughout.
• Have you been able to discuss it with the RPS or can you not get that far?
• Have you had a written response from the IP's firm on this? Director redundancy claims can be a complex issue but if the IP is not allowing your claim you should be able to get a proper written [email is fine] explanation. The IP should consider your claim before rejecting it!
• If necessary, see if you can find the IP's complaints process on their website and failing that escalate to the IP's regulator etc.