Winding up petition served

[DLA001]

Hello,

My limited company has been served with winding up petition by HMRC for a debt of over £230K. I want to take advise how should I respond to it. Date is set for mid July.

Company has outstanding BBL of approx £25k (original amount £32K).

There is a DLA of approx £150K.

Please guide me where I can take more advise and how should I prepare myself.

Thanks

 

[ChrisCallaghan]

Hi @DLA001

Thank you for posting, and I'm sorry to hear about the action your company is facing.

There is no short answer to your question, as what to do next would depend on several variables and you're preferred outcome.

At this time, the sensible course of action would be to explore all of the options available with a licensed insolvency practice. Myself, or any of the insolvency regulars here on UKBF, would be happy to offer you a free, confidential and no obligation chat about what options are available.

If you would like a quick summary of some of the options that could be explored, please see the below link from our website:

I Have Received A Winding-up Petition. What Can I Do? | Wilson Field® - Licensed Insolvency Practitioners

If you’ve received a winding-up petition (WUP), you must deal with it quickly. A WUP can lead to the company's closure via compulsory liquidation.

www.wilsonfield.co.uk

 

[Frank Wessely]

Hi @DLA001

I assume that this has been escalating over many months at least to end up as you describe.

Why has it been allowed to reach this stage?

Do you dispute the sum claimed by HMRC?

What does the debt comprise?

Please outline the type of business you are in.

Can you summarise the company's overall assets and liabilities.

Are you still trading?

What is the staff situation?

Is the DLA balance owed to you or by you?

Does your bank know about the petition?

Are you looking to save the company / the business?

If you can answer these points we can go from there. More questions will follow, I am sure. There are various legal issues that arise when a winding up petition is issued. Without going into those details now, you should take immediate advice.

Feel free to give me a call on the number below for an initial discussion. No charge or obligation.

Thanks.

 

[DLA001]

Thanks Frank and Chris for prompt reply.

I was hit with £750 and £150 penalty for filing returns late for previous two years. Comapnies house got CCJ for £900 (including fees) which I was going to pay this month but I have not received any other letters for paying outstanding balance. I will dopuble check with address registration company to see if there has been any post which they have not forwarded.

I owe company DLA and there is no employee other than me. I will have to double check the balance as it might be different than the amount claimed but I don't think it will be too different than this. The only issue can be where they estimated debt for missed returns but don't think that will change too much.

Bank doesn;t know about this yet.

I am in the process of ceasing trading after receiving petition.

Company was used to provide IT consultancy and web development services. Work was mostly carried out by myself with some work outsourced (approx 25%) depending on work situation at the time. I had admin employee who was paid around £400/£500 per month but agreed with her that there is no more work for her so will only pay on work allocated basis so not paid her in last few months but nothing outstanding to her.

Turnover has varied significantly as from £80K - £180K per year

Thanks

 

[ChrisCallaghan]

At first glance, I suspect it may be worth exploring a Voluntary Liquidation.

It would sound as though there would be no challenge to HMRC's claim, and closure may be inevitable. You could choose to simply let the petition go through, and then the liquidation would likely be dealt with by the Official Receiver's office. However, in liquidation you will be asked to repay your overdrawn director's loan account. How much of this you actually repay and when will be dependent on your personal financial circumstances and any agreement you can come to with the liquidator. Most directors would prefer to to have these discussion with a liquidator they have chosen (e.g. my firm or @Frank Wessely ).

My apologies for the brief summary - happy to discuss in more detail over a phone chat.

 

[ChrisCallaghan]

P.S. For my part, I would be happy as part of any consultation to explore what the likely outcome would be when it comes to repayment of director's loan account - I'm sure Frank would offer the same.

 

[Lee Green]

Chris and Frank have summarised it well. The key thing now is to take action promptly. The fact that there is a petition served means that payments you make now, without a validation order, could be overturned in due course should the winding up order be made.

As they have said, an insolvency is going to impact on you personally as there will be a claim against for your outstanding loan account. It is worth checking what the current balance for this is, if you have continued to make drawings since the previous accounts were prepared.

The HMRC debt appears to be pretty substantial, with reference to your quoted turnover figures. I presume this is made up of some fairly historic taxes?

Again, happy to throw my name in the hat if you need a further opinion, but the key thing is to take advice.

 

[Lisa Thomas]

I agree the options are - let the petition continue and deal with the Official Receiver who will be appointed as Liquidator by the court or appoint your own liquidator via a Creditors Voluntary Liquidation, if it's not too late, and HMRC agree to withdraw the petition.

You might be out of time for a CVL if you don't act quickly.

Either way I'm afraid the liquidator will call in the DLA so you need to be prepared to negotiate repayment.

 

[Gyumri]

I agree the options are - let the petition continue and deal with the Official Receiver who will be appointed as Liquidator by the court or appoint your own liquidator

If I were in the OP's shoes I would call it a day and let the OR do whatever he needs to do because firstly he takes ages to lift his finger and secondly because the liquidation will take place at the taxpayer's expense.

In the time it takes for the OR to wake up and smell the coffee your fortunes and ability to repay the DLA may have significantly improved

 

[japancool]

I was hit with £750 and £150 penalty for filing returns late for previous two years.

But a debt of £900 doesn't escalate to £230k unless something has really gone wrong. That would suggest you haven't paid VAT or CT for several years. What else is owed? Not only did you not pay that, but you also took out £150k that arguably belongs to HMRC. Where did all the money go?

The OR will want to know, and it could lead to more serious personal consequences, so I suggest you have your explanation straight. I know Covid hit us all hard, but that reason only goes so far. If you have assets, you could stand to lose them, so I wouldn't try to do this yourself. Get specialist advice.

And what happened to the BBL?

 

[Lisa Thomas]

If I were in the OP's shoes I would call it a day and let the OR do whatever he needs to do because firstly he takes ages to lift his finger and secondly because the liquidation will take place at the taxpayer's expense.

In the time it takes for the OR to wake up and smell the coffee your fortunes and ability to repay the DLA may have significantly improved

The costs will be paid from the company's assets (including any DLA recoveries). Taxpayer only funds if there is a shortfall.