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JGM
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 11422
Experience:  30 years as a practising solicitor.
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, We work in a landscaping company which is in financial

Resolved Question:

,
We work in a landscaping company which is in financial difficulties. We are limited and have in particular the inland revenue snapping at our heels. One of the directors left the company in the spring of last year and the director left has been struggling, hence the situation. Inland Revenue are threatening to take legal proceedings against us. We accept we owe them a lot of money through vat, paye & corporation tax and we are paying them £100 per week and although we know that is not nearly enough it is all we can do. Work is very slow and even when we get a job in, the money seems to come in and fly right out again barely covering wages, fuel & materials. What is the worst case scenario that the IR can do to us?
thanks help
Submitted: 2 years ago.
Category: Scots Law
Expert:  JGM replied 2 years ago.
Thank you question.
The worst case scenario is that HMRC liquidates the company. The effect of that depends on a few things. Can you tell me what assets the company has, what value is attached to the tangible assets and also what the company has in debtor assets at the moment, in other words the value of money outstanding to the company?
Can you also tell me broadly what the total of creditors is?
Customer: replied 2 years ago.

The company has a pick up and a small van, which to be honest are not worth much at all and spend a lot of time in the garage!! we rent a piece of ground depot and only have hand & some power tools but again, I would not think that would arise to any great amount.

the vat debt is prob siting about 40k, and our credit card sits at 6k, and we probably owe creditors approx 20k i would think

Expert:  JGM replied 2 years ago.
What debtors do you have, ie, the total value of what customers owe you?
Customer: replied 2 years ago.
None actually - we always work on the basis of stage payments so we don't actually have any credit building up
Expert:  JGM replied 2 years ago.
OK so you have a company which has an income and expenditure serviced by manpower but there are very little assets and substantial liabilities.
You are trading whilst insolvent as you can't meet your debts as they fall die and you must stop trading like that immediately or the remaining directors could find themselves in a lot of trouble and personally liable debts.
You need to see an insolvency practitioner immediately and put this company into liquidation. That will have the practical effect of wiping out the debts as the company has no assets to pay them. You can arrange to buy the tools and vehicles from the liquidator if you wish and you can start again either as a sole trader or as another company.
I apprciate that that advice is quite radical but that's what has to happen. I am happy to discuss this further.
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