Supplier not delivering goods and refusing to refund

Discussion in 'Accounts & Finance' started by Dave0108, Oct 5, 2018.

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  1. Dave0108

    Dave0108 UKBF Contributor Free Member

    52 1
    Hi,

    The amount in question is just over £2000.

    I have the following situation. I am a LTD company in UK and my supplier is also an LTD company in UK. I have been dealing with them for just under 3 years and did 8 stock purchases in total. On the 8th stock purchase the supplier has not delivered the goods. It has been over 2 months since I paid them and the owner came up with every excuse in the book as to why he has not delivered the goods. His grandmother died... he is waiting for other customers to pay him... his accountant made an error and he overpaid VAT... etc etc etc. Every time I call him he comes up with a new excuse. Although he never ignores me. Always picks up the phone.

    In any case. I have studied advice on .gov website etc and followed the procedure and sent him a letter before action. The letter was sent by recorded signed for delivery and has been delivered to their registered company address as per companies house data. It has been signed for.

    Hopefully the letter I wrote is in good format. This is it here: https://imgur.com/a/EtQOy0f

    So today is the deadline I set for payment to be made or I will initiate small claims procedure.... so my plan is to do the following:
    1. Initiate small claims procedure
    2. Follow the procedure to reach the county court judgement
    3. Get bailiffs involved?
    4. Follow this procedure if all else fails? https://www.gov.uk/wind-up-a-company-that-owes-you-money
    Am I doing the right thing here or is there better ways to address my situation? Can someone please advise who had similar situations in the past? I would VERY much appreciate it.

    p.s. by doing some reading online I was really shocked by how easy it seems to be to take another company's money and not deliver the goods or provide a service. I may be still fairly "green" in business but surely this is no better than theft/robbery. It seems there are many companies who just take money from customers and then just close the company so they dont have to pay anything. I also read about County Court Judgement being ignored and people still dont pay up. Is it really that easy? Maybe I am in the wrong business...
     
    Posted: Oct 5, 2018 By: Dave0108 Member since: Oct 16, 2015
    #1
  2. Gecko001

    Gecko001 UKBF Enthusiast Free Member

    2,841 449
    Take one step at a time. Have you asked for a refund or are you claiming breach of contract because you did not receive the goods within a certain time limit?
     
    Posted: Oct 5, 2018 By: Gecko001 Member since: Apr 21, 2011
    #2
  3. Mr D

    Mr D UKBF Legend Free Member

    25,449 3,108
    With some issues yes its really that easy. I closed mine owing over £40k to external suppliers.
    The choices were limited and one way or another the company was going to close owing a lot.
     
    Posted: Oct 5, 2018 By: Mr D Member since: Feb 12, 2017
    #3
  4. Dave0108

    Dave0108 UKBF Contributor Free Member

    52 1
    Interesting. So what exactly stops people from just opening companies, pretending they are a wholesaler for example.... getting paid by customers.... then paying themselves with LTD money as director salary .... then closing company down when they run out of cash claiming they have gone bankrupt.

    Since Limited Company is disconnected from directors private property so director will never loose any of his personal items. Debt cannot be reclaimed from director. This sure beats working a 9 to 5. Am I missing something here?
     
    Posted: Oct 5, 2018 By: Dave0108 Member since: Oct 16, 2015
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  5. Dave0108

    Dave0108 UKBF Contributor Free Member

    52 1
    I have sent them around 10 emails, and have over 20 recorded phone calls where I am asking for a refund because the company has not delivered the goods.

    Unfortunately the invoice does not state when the goods should be delivered by. However I have a recorded phone conversation where the company does say the goods will be delivered "within 30 days as all our previous orders".

    At this time all I want is my refund and nothing to do with that company ever again.
     
    Posted: Oct 5, 2018 By: Dave0108 Member since: Oct 16, 2015
    #5
  6. Mr D

    Mr D UKBF Legend Free Member

    25,449 3,108
    Companies don't go bankrupt, they go insolvent.
    But yes, there are people who do that. If you look at some companies you can see a director has dissolved perhaps a half dozen companies in a few years.
    Without knowing the details its easy to accuse.

    Whether any of their creditors ever spend money to involve an IP and get a report written about directors actions for others to decide about banning them from being director....?
    A director who is setting up companies then taking money and running isn't ever going to use an unsympathetic IP. Doesn't need to use an IP even, that way no report done.
     
    Posted: Oct 5, 2018 By: Mr D Member since: Feb 12, 2017
    #6
  7. The Byre

    The Byre UKBF Legend Full Member

    10,518 4,440
    We have someone on this forum who specialises in just this sort of thing - namely @smallclaimsassistance who can hold your hand throughout the whole process. I suggest you contact him and get his guidance and advice!
     
    Posted: Oct 5, 2018 By: The Byre Member since: Aug 13, 2013
    #7
  8. Gecko001

    Gecko001 UKBF Enthusiast Free Member

    2,841 449
    The clue is in the name "Limited Company". Often that is forgotten. The Ltd company system is there so that people can take risks to innovate without putting their own personal finances at risk. Some poeple abuse the system.

    Limited companies have to publicly disclose certain details about their financial status to mitigate some of the risks that they present to suppliers and customers. Many businesses check up on that publicly disclosed information before doing business with a Ltd. I sometimes do it and have refused to take on clients as a result of what I have found out from the publicly available information.
     
    Posted: Oct 5, 2018 By: Gecko001 Member since: Apr 21, 2011
    #8
  9. The Byre

    The Byre UKBF Legend Full Member

    10,518 4,440
    Every time that someone comes to me with their tale of woe about getting stiffed for payment by some delinquent company or person - and I do mean EVERY TIME - an on-line search reveals that the person in question has had a series of folded companies, CCJs and similar.

    Due diligence on customers and suppliers is more important than ever today and it is easier than ever! You can not only search the company, but you can look at the history of the directors and even find out if a sole trader has had folded Ltds in the past.
     
    Posted: Oct 5, 2018 By: The Byre Member since: Aug 13, 2013
    #9
  10. deniser

    deniser UKBF Legend Free Member

    8,100 1,702
    We don't pay any of our UK suppliers in advance - we pay them anywhere between 30 and 60 days after delivery.

    Why were you still paying upfront on your 8th order with this company? Did this not set alarm bells ringing?
     
    Posted: Oct 5, 2018 By: deniser Member since: Jun 3, 2008
    #10
  11. Mr D

    Mr D UKBF Legend Free Member

    25,449 3,108
    That's the opposite problem to the 'lend them money and hope they can pay' that companies being stiffed often have on here.

    Some of us prefer not borrowing money very much.
     
    Posted: Oct 5, 2018 By: Mr D Member since: Feb 12, 2017
    #11
  12. Dave0108

    Dave0108 UKBF Contributor Free Member

    52 1
    Well, each previous order was delivered within 30 days after payment was made. So I trusted this company.

    Also I am not a huge business. I am a one man band selling items on eBay/Amazon/Etsy/Shopify.

    For the type of items which I sell I have NEVER found a single supplier who would send goods without me paying for them first. UK or otherwise.
     
    Posted: Oct 5, 2018 By: Dave0108 Member since: Oct 16, 2015
    #12
  13. Mr D

    Mr D UKBF Legend Free Member

    25,449 3,108
    Plenty give credit. I've been offered credit, with current company and previous company, by almost every supplier I've got.
    The exceptions being the warehouses I use, one doesn't give credit ever.

    I've sold on the same 4 sites, perhaps just different items.
    Clothing, gifts, home, craft, crafted, toys and collectors items.
     
    Posted: Oct 5, 2018 By: Mr D Member since: Feb 12, 2017
    #13
  14. deniser

    deniser UKBF Legend Free Member

    8,100 1,702
    You might want to look at opening a credit account in future to protect you from this sort of thing. One man band or not, if it's still a business rather than a hobby, and you must be building up your credit score.
    We started from scratch with a limited company (which is much more risky for a supplier than a sole trader) and got credit on orders from about the 3rd order in. It's definitely worth asking - obviously not if you are brand new to them - but if you have placed several orders successfully.

    If you can't get credit, you could use a credit card or Paypal to give you some security. A lot of wholesalers are going bust because the independent retailers that they supply are closing down. If anyone asks for cash up front that signals a problem.
     
    Posted: Oct 5, 2018 By: deniser Member since: Jun 3, 2008
    #14
  15. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    Back to the original question, if the man has no money to pay you then a ccj may not work and just cost you money for the claim, on the other hand he may just be stalling and you get the ccj paid with costs, only you know what chance you have

    You sent the letter so now is the time to take action, if not they will know you were bluffing and put you to the back of the list to pay

    To me it sounds like they just brought in goods when they had a order so ran out of cash and cannot aford to buy in your missing stock, so start assuming the £2k is lost and work on that basis for your company and just hope you eventually get it back
     
    Posted: Oct 5, 2018 By: Chris Ashdown Member since: Dec 7, 2003
    #15
  16. Dave0108

    Dave0108 UKBF Contributor Free Member

    52 1
    Chris,

    If the outcome is that I never see the money again. Can I write it off?

    Firstly around £333 of that money is VAT which I get to reclaim anyway.

    That leaves around £1667. How would I write this off as a loss?

    I guess it must be one of two ways?

    A. Calculate the corporate tax for the year and take away £1667? (I guess this is not how it will work, it would be too good to be true).

    B. Calculate 19% of that amount by doing 1667 * 0.19 = £317. Therefore my actual loss of cash would be £2000 - £333 - £317 = £1350?
     
    Posted: Oct 5, 2018 By: Dave0108 Member since: Oct 16, 2015
    #16
  17. Mr D

    Mr D UKBF Legend Free Member

    25,449 3,108
    Yes, as a retailer at least a little credit can be beneficial. So long as staying on top of it.

    Many times I've come across new sellers who had a 30 day credit account with a supplier, got a bunch of items and then find they cannot pay at due day.
    Maxed out the credit and stuck with stock not selling quick enough or high enough profit.
     
    Posted: Oct 5, 2018 By: Mr D Member since: Feb 12, 2017
    #17
  18. Scalloway

    Scalloway UKBF Legend Free Member

    16,597 3,514
    If you have paid the money it will already appear in your accounts as an expense. You don't need to do any more to get tax relief on it.
     
    Posted: Oct 5, 2018 By: Scalloway Member since: Jun 6, 2010
    #18
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