HM Revenue & Customs
You should firstly ensure that you have completed all required outstanding returns for PAYE, Corporation Tax, VAT and any other industry specific taxes you need to pay.
This will act to limit your liabilities to HMRC by reducing any outstanding penalties. Actual return amounts are usually lower than the assessments that will be raised by HM Revenue & Customs.
Bringing PAYE records up to date and arranging for P45 returns to be submitted will make outstanding entitlement claims from the redundancy payments office due to you and your staff much more straightforward.
If you’re receiving visits from HM Revenue & Customs enforcement officers, once you’ve engaged an insolvency practitioner and agreed a date for the winding up then they’ll generally back down fairly quickly to allow the company to be formally placed into Liquidation.
If you’ve received notice from any court enforcement officers or High Court enforcement officers, details of these should be passed to the Insolvency Practitioner as soon as possible.
Once notice is received there should be no delays in proceeding with your instruction as the insolvency practitioner cannot stop bailiffs until they are formally arranging the winding up of the company.
Books and Records
As a director you have a statutory duty to preserve the company’s books and records.
The insolvency practitioner will ask for these very early in the liquidation so it’s important to ensure these are accessible. In particular you should ensure that information to support creditor balances is available in order to adjudicate their claims and information related to debtors is also available to assist the insolvency practitioner with the collection of the debtor book.
If the records are deficient and this leads to losses to the Company such as significant debtors becoming non collectable then this is one matter which will have to be included in the diretor’s conduct report which we have to submit to the Secretary of State. Based on the findings there may be several sanctions up to and including disqualification.
You should also be ready to deliver the login details for online services, including but not limited to any cloud-based accounting software, the HMRC pages for VAT, PAYE and CT, the Company website and any other selling sites used such as PayPal and Ebay.
Company Bank Account
You should take steps to immediately cancel all direct debits and standing orders and we’d generally suggest reporting any credit and debit cards as lost or stolen so no payments are taken where mandates have been granted.
You shouldn’t make any payments from the company account, particularly to yourself or others you wish to pay off as you will become personally liable for these payments.
If the account is overdrawn you should ensure no further receipts are paid into this account, particularly if it’s been personally guaranteed as you’ll also be personally liable to compensate the estate for these payments.
The company account will likely be frozen once notice of the pending liquidation is published in the London Gazette so you should take every step to ensure that movement in the company account is limited short of receiving debtor payments where the account is already in credit.
It’s imperative that all actions are taken to preserve the assets of the Company.
As a director you can take forward the assets of the company, but you’ll need to purchase them from the Liquidator. To enable this to happen and to also provide an accurate Statement of Affairs, which you’ll need to sign a Statement of Truth and provide details of all assets of the company as well as a recent stock take.
The insolvency practitioner will then obtain a professional valuation from RICS Chartered Surveyors who will carry this out either on site or based on the lists provided depending on the nature of the assets.
If a list is requested it’s important to ensure that all assets are included as if any aren’t declared then they would not be included in the transfer which would mean:
- The purchaser would not have legal ownership of the assets.
- High Court Enforcement Officers would be able to uplift these assets.
- If the Insolvency Practitioner becomes aware of these assets at a later date, they can arrange for these to be uplifted and also seek rental for the time they have been used.
Conventional wisdom might tell you that they can be bought for pennies in the pound however this is simply not true. All assets must be bought at market value or they’ll be uplifted and offered for sale to third parties who will pay the required amount.
Retention of Title
If any creditors approach you, advising that they have retention of title and wish to collect their assets then no action should be taken and you should refer them to the instructed insolvency practitioner to validate their claim.
It’s important to ensure that once the decision to liquidate the company has been made then arrangements are undertaken to properly deal with the redundancy or TUPE transfer of any employees.
Where there isn’t a new Company seeking to take over the contracts of employment, it’s important to ensure that proper arrangements are made to deal with the redundancy process.
Where 20 or more members of staff are to be made redundant then there’s a legal requirement to notify the Redundancy Payments Office immediately.
Our insolvency team can then arrange to assist you in speaking to the staff in relation to their redundancy situation. It’s important to ensure that if staff have any Company assets then a list is provided to the insolvency practice and staff are asked to bring these items to the meeting, otherwise they are difficult to recover.
Many firms take staff through the redundancy process, however they don’t assist them with what’s next. Our team can arrange for representatives from Jobcentre Plus and the careers service to attend the meeting to provide advice to staff on how they can move forward and claim any entitlements.
Staff will be able to formally make claims for their entitlements to the Redundancy Payments Office which will usually take between three to six weeks to process once the company is formally in liquidation.
Directors are also fully entitled to claim redundancy too, however the process is not quite as straightforward as for employees.
If the assets of the business are sold prior to the company being placed into liquidation and staff continue to work after the date of the sale without interruption it is deemed that a transfer under TUPE has taken place.
The effect of this is that staff contracts will continue under the same terms and entitlements under the new business and this is not reversible.
All of this may seem a lot of extra work to do at an already stressful time, however it will leave the company in a clearer position before you instruct an insolvency practitioner.
It will make any liquidation process quicker to deal with and more effective. Ultimately, by getting the work done in preparation for liquidation, you are lessening the amount of contact you will need with a liquidator after it!