New law to stop spongebob plan??
- Thread starter CF2
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In 6 days its Monday when you owe the company.
Companies house will eventually strike off a company currently when it doesn't submit its returns too.
Timescale measured in months. And HMRC can object if there's money or paperwork outstanding.
Eventually companies house ignore objections that don't do anything.
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Ironically, the Spongebob Plan is now more effective than ever and easier to follow. I must update it.
The change has been the introduction of the Confirmation Statement which all companies have to submit each year. If a company does not submit the Confirmation Statement it will receive within a couple of weeks notification from Companies House that the company will be struck off in two months.
Two weeks after the expiry of that two month deadline the company is dissolved automatically.
The significant thing about this process is that creditors need not be informed of the imminent dissolution, and that it does not appear to be advertised in the London Gazette. HMRC and the company's bank do not seem to be made aware that the company is to be dissolved!
I have twice recently tested the procedure with companies of my own which I wished to close - one of them with a small overdrawn Director's Loan Account and the other with a Corporation Tax liability.
Both were dissolved as per the above timeline without any fuss. The company bank accounts are still active, so clearly there is a complete break-down in the previous communications when a company is dissolved.
The change has been the introduction of the Confirmation Statement which all companies have to submit each year. If a company does not submit the Confirmation Statement it will receive within a couple of weeks notification from Companies House that the company will be struck off in two months.
Two weeks after the expiry of that two month deadline the company is dissolved automatically.
The significant thing about this process is that creditors need not be informed of the imminent dissolution, and that it does not appear to be advertised in the London Gazette. HMRC and the company's bank do not seem to be made aware that the company is to be dissolved!
I have twice recently tested the procedure with companies of my own which I wished to close - one of them with a small overdrawn Director's Loan Account and the other with a Corporation Tax liability.
Both were dissolved as per the above timeline without any fuss. The company bank accounts are still active, so clearly there is a complete break-down in the previous communications when a company is dissolved.
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It would appear that not submitting the Confirmation Statement is the silver bullet!
The beautiful thing about it is that all that has to be done is absolutely nothing.
No lies, no concealment, no subterfuge, no stretching the law.
Just not submitting the Statement and sitting back for 10 weeks.
You couldn’t make it up!
The beautiful thing about it is that all that has to be done is absolutely nothing.
No lies, no concealment, no subterfuge, no stretching the law.
Just not submitting the Statement and sitting back for 10 weeks.
You couldn’t make it up!
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“My advice is always based on what’s best for you and your business.”
I couldn’t have put it better myself. The thousands of people who have successfully followed the Spongebob Plan and escaped insolvency with their lives intact have reason to be glad I do my research.
I couldn’t have put it better myself. The thousands of people who have successfully followed the Spongebob Plan and escaped insolvency with their lives intact have reason to be glad I do my research.
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Blaby Loyal
Sir, use of such terminology ("scamming") just demonstrates ignorance on your part.
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You've told yourself that so many times I think you actually believe it.
Anyway, we could just go round and round in circles with this, so I think agreeing to disagree is the only way forward.
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What about when the Director empties the bank account after the company has been dissolved, would that not be theft?
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Blaby Loyal
I don't know whether that would fall under the definition of theft but it would certainly be unlawful as, in the event of dissolution, the bank account monies would be bona vacantia.
What about if the former director pays the money to a creditor/creditors?
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Before or after, the director would almost certainly get away with it.
Unless a liquidator is appointed, no-one has the job of looking into the affairs of the company. Once the company is dissolved, no-one is remotely interested.
The system is hopelessly flawed. All I’m doing is pointing out the flaws.
In a genuine case of insolvency of course, it is highly unlikely that there would be any funds in the company bank account.
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The Byre
Thank you!
It really is time that all directors and 'persons of significant influence' are banned for several years from running any company or engaging in business for a set period after an insolvency.
That measure would not only stop dishonest insolvencies, but also dissuade people from the goofy and careless ways that some people set up businesses without the proper capital, knowledge or preparations.
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The flaw I’m pointing out here has not necessarily anything to do with insolvency.
If a company is struck off by Companies House simply for non-submission of the Confirmation Statement it has not been subject to any insolvency process.
Thousands of companies are routinely struck off the register every week - in all probability without any human involvement.
There might be any number of perfectly valid reasons why a company is no longer required by its owners and allowed to die. Are you suggesting that they are all banned?
The whole purpose of limited liability is to allow entrepreneurs to take risks without the fear of personal financial ruin if it goes wrong. It works very well on the whole and the economy would be a lot worse off without it. It is no accident that the concept has been embraced in every developed country in the world.
If a company is struck off by Companies House simply for non-submission of the Confirmation Statement it has not been subject to any insolvency process.
Thousands of companies are routinely struck off the register every week - in all probability without any human involvement.
There might be any number of perfectly valid reasons why a company is no longer required by its owners and allowed to die. Are you suggesting that they are all banned?
The whole purpose of limited liability is to allow entrepreneurs to take risks without the fear of personal financial ruin if it goes wrong. It works very well on the whole and the economy would be a lot worse off without it. It is no accident that the concept has been embraced in every developed country in the world.
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Then would mean those who have learnt how to do something should be banned from doing it for that time.
My company went under. I learnt from it.
I had a little bit of stock the crown solicitor didn't want so they declaimed ownership. What should be done with such stock?
By your idea it should be binned or sold for a couple of pence in the pound to someone?
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The Byre
No, just the bankruptcies. Directors would run a mile from a court declaring them insolvent, if they knew that it meant that they would have to kick their heels for three-to-five years and could not just 'phoenix' their companies and start the whole game all over again.
They very obviously did NOT learn how to do it. A three-to-five year time-out would give them an opportunity to learn the error of their ways.
It would also stop the many, many fraudulent insolvencies and liquidations.
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No, they did indeed learn how to do it. By the fact they were doing it.
Humans appear to be able to learn by mistakes, eventually.
The very thing you want to stop the serial business closers will also stop those who could do well with a 2nd business.
Throwing out the baby with the bathwater.
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The Byre is advocating using a sledgehammer to crack a nut. The vast majority of company insolvencies are genuine cases of business failure. Half of businesses fail in their first five years - to ban all these people from going into business again would be ridiculous.
He's trying to solve a problem that barely exists.
And anyway, the method I’ve outlined in this thread of getting a company dissolved would circumvent completely his proposed sanctions.
He's trying to solve a problem that barely exists.
And anyway, the method I’ve outlined in this thread of getting a company dissolved would circumvent completely his proposed sanctions.
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The Byre
This thread caused me to poke my head round the office door to ask if anybody knew what the current law was in Germany on the delinquent behaviour of directors and owners. A massive discussion broke out and briefing papers were emailed and laws and cases of precedent were sited.
Having been briefed in great detail by various parties, I can now state that in Germany, there are four categories of behaviour that make the directors and/or persons of 'significant influence' not only personally liable for debts, but trigger a three-year ban on running a business -
1. Bad judgement. This means reckless or unreasonable judgements.
2. Stepping outside of their areas of competence. For example, making a legal judgement, without consulting a lawyer, or making decisions on tax liability without consulting an accountant.
3. Self-enrichment. For example, charging a subsidiary a disproportionate service or IP fee, or a director running up unreasonable personal costs.
4. Illegal behaviour or dealings.
The overall governing legal framework means that Directors are required to act at all times in the best interests of the company and are required by law not to neglect or disregard their duty of care and the legal requirement to conduct due diligence when dealing with others.
The usual trigger for such a move is the court finding a company to be insolvent and thereby declare it bankrupt. A bankruptcy is regarded under German law to have been somebody's fault, i.e. the result of delinquent behaviour and that brings with it, personal liability.
Except that in the UK, the idea of limited liability has meant that many directors and owners act as if they enjoy total freedom to act recklessly or even dishonestly.
Having been briefed in great detail by various parties, I can now state that in Germany, there are four categories of behaviour that make the directors and/or persons of 'significant influence' not only personally liable for debts, but trigger a three-year ban on running a business -
1. Bad judgement. This means reckless or unreasonable judgements.
2. Stepping outside of their areas of competence. For example, making a legal judgement, without consulting a lawyer, or making decisions on tax liability without consulting an accountant.
3. Self-enrichment. For example, charging a subsidiary a disproportionate service or IP fee, or a director running up unreasonable personal costs.
4. Illegal behaviour or dealings.
The overall governing legal framework means that Directors are required to act at all times in the best interests of the company and are required by law not to neglect or disregard their duty of care and the legal requirement to conduct due diligence when dealing with others.
The usual trigger for such a move is the court finding a company to be insolvent and thereby declare it bankrupt. A bankruptcy is regarded under German law to have been somebody's fault, i.e. the result of delinquent behaviour and that brings with it, personal liability.
This forum is daily witness to the opposite.
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Here first the company must be investigated for wrongdoing to be found. Any different in Germany?
Do all companies in Germany get investigated when they dissolve?
And here directors can be banned from being directors - for a period lower or higher than 3 years, based on the investigation? Is that better than a mere 3 year ban regardless?
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Blaby Loyal
Pretty much the same laws rules and regulations apply here [England and Wales] though.
When I started in insolvency there was an offence of gambling or rash or hazardous speculation in respect of bankruptcies but that was removed; same for the reduction in the term of a 'normal' bankruptcy from three to just one year; same for the increase in the bankruptcy limit from £750 to a bizarre £5,000.
The problems lie elsewhere e.g. the massive costs to bring legal actions, the ease to protract and prolong actions, closure of Official Receivers' offices, poorly paid and poorly trained staff at the Insolvency Service, general creditor apathy.
When I started in insolvency there was an offence of gambling or rash or hazardous speculation in respect of bankruptcies but that was removed; same for the reduction in the term of a 'normal' bankruptcy from three to just one year; same for the increase in the bankruptcy limit from £750 to a bizarre £5,000.
The problems lie elsewhere e.g. the massive costs to bring legal actions, the ease to protract and prolong actions, closure of Official Receivers' offices, poorly paid and poorly trained staff at the Insolvency Service, general creditor apathy.
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The Byre
You are conflating dissolving with a court order for insolvency.
That I fear is the real problem. Laws are completely pointless if they are never or seldom enforced.
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How about making directors personally responsible for all debts if the company failed within the first two years
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I doubt many suppliers get cought with large losses in the first two years of a company unless they offer credit terms (not essential to do so) and have poor credit control if the do offer credit terms
Most seem to be failure to pay HMRC which should be a criminal act in all our interests and the banks which have PG anyway
Serial offenders with phenix companies seem to rely on in many cases conning people into paying prior to service with no real checks undertaken by the persons involved and by not paying upon set results but paying in full at the start
Nobody seems to read and small print prior to signing contracts
Most seem to be failure to pay HMRC which should be a criminal act in all our interests and the banks which have PG anyway
Serial offenders with phenix companies seem to rely on in many cases conning people into paying prior to service with no real checks undertaken by the persons involved and by not paying upon set results but paying in full at the start
Nobody seems to read and small print prior to signing contracts
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The Byre
Or as my grandfather used to say, "Stupidity must be punished!"
In Collodi's original book, 'The adventures of Pinocchio' the gorilla judge throws Piniocchio into prison for being cheated and conned out of his five pieces of gold by the Fox and the Cat.
There are some jurisdictions where 'reckless incitement to crime' is itself a crime. A fun and funky concept!
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