Starting a New Company While Existing Company Becomes Insolvent

Discussion in 'Insolvency' started by Instabus, Feb 14, 2020.

  1. Instabus

    Instabus UKBF Regular Full Member

    205 23
    I think you're mixing up two conversations here possibly?
    I agree that it looks likely that I should have come off the payroll once I'd decided I was going to close the business. But just to stress the point, until that moment, and for the ten years prior, the company was solvent.

    With regards to the years spent paying tax, that was to make the point that I have been a good employer of people for the best part of a decade and I intend to continue to be so, just as soon as I've sorted out this mess.
     
    Posted: Feb 15, 2020 By: Instabus Member since: Oct 14, 2012
    #21
  2. Mr D

    Mr D UKBF Legend Free Member

    22,126 2,604
    How long the company was solvent is irrelevant. What you do going forward is also up to you.
    What you have to deal with now is the insolvent business. Hopefully without losing the liability protection of the limited company.
     
    Posted: Feb 15, 2020 By: Mr D Member since: Feb 12, 2017
    #22
  3. Instabus

    Instabus UKBF Regular Full Member

    205 23
    And that's exactly what I'm trying to do.
    I do need a fresh start/clean break but I don't wish to screw the Treasury.

    What are your thoughts on approaching HMRC to make a personal guarantee to repay all owed tax from the new company? I have a new business, almost ready to launch.
     
    Posted: Feb 15, 2020 By: Instabus Member since: Oct 14, 2012
    #23
  4. The Byre

    The Byre UKBF Ace Free Member

    9,802 3,968
    If you are not about to 'phoenix' your company and are going to honour your debts, or at least as much as can be honoured, given the circumstances, then nothing I have said applies to you.

    But almost all of us who are engaged in business get hit by someone using the lax debt laws in almost every country who just turns their pockets out and shows the White-Eared Elephant and then, having stiffed every creditor for huge sums, resumes trading under another Ltd. as if nothing had happened.

    If that is not you, then I apologise profoundly for any and all offense caused.
     
    Posted: Feb 15, 2020 By: The Byre Member since: Aug 13, 2013
    #24
  5. Mr D

    Mr D UKBF Legend Free Member

    22,126 2,604
    You can always, as anyone in Britain can, make an additional payment to the treasury. Very few people do (often enough 5 people a year or less and some of them sending 1p).

    Problem you have with new company is it doesn't owe the tax. What you choose to do with money you take out of the company is up to you.
    Ultimately it does not make a difference.
     
    Posted: Feb 15, 2020 By: Mr D Member since: Feb 12, 2017
    #25
  6. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,488 436
    The Company is insolvent.

    You should not draw any further funds from it.

    Options are:

    1. Do nothing (not advisable) and as a result,

    either:-
    • Companies House will eventually strike the Company off for non filing of statutory returns.
    • A creditor will liquidate the Company

    2. Try and Dissolve the Company yourself following this guide:

    https://www.gov.uk/government/publications/company-strike-off-dissolution-and-restoration

    This is not really appropriate in the circumstances because there is enough cash to pay for Liquidation.

    3. Liquidate the Company through the Court.

    It will cost c£3-4k to pay for this upfront

    4. Liquidate the Company voluntary through an Insolvency Practitioner. .
     
    Posted: Feb 17, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #26
  7. Instabus

    Instabus UKBF Regular Full Member

    205 23
    Thanks for the response Lisa.

    Just thought I would update this thread.

    Having had a lengthy 'clear the air' chat with my accountant, I've taken his advice to keep the company running for the short to medium term with a potential view to closing it in the future.

    The last thing I wanted to do was avoid my tax responsibilities.
    It was just the tidying up of the mess that I was trying to avoid although I recognise that these are also my responsibilities too.

    So we've just pushed forward my year end by 6 months (something I didn't realise I could do) which gives me significant breathing space as I had my next accounts due by the end of February.

    The tidying up appears to be a lot less complicated than I had thought as the complications are my accountant's responsibility rather than mine. All I need to do is get him all of my invoices and receipts for the past 12 months and he will do the rest.

    He was deeply concerned by my desire to allow the company to be struck off in these circumstances, and clearly with some of the responses in here, he was not alone. I just wanted/needed an easy way out but this would have caused me more problems in the longer term.

    So given that I am about to launch a new business activity, I no longer consider my company to be insolvent. Perhaps you may disagree?
     
    Posted: Feb 23, 2020 By: Instabus Member since: Oct 14, 2012
    #27
  8. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,488 436
    The Company is still insolvent on the basis it cannot pay its debts as and when they fall due - i.e the C House fines and PAYE arrears.

    The amounts are only small so shouldn't be much of an issue as long as the position gets better and not any worse.
     
    Posted: Feb 25, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #28