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APNs and advising your clients

12th June 2018
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Credit Control – Getting in the cash (cheque or direct debit…..)

23rd May 2018
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There’s too much month left at the end of the money!

8th May 2018
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VVA’s Viable Voluntary Arrangements

29th March 2018
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VVA’s Viable Voluntary Arrangements

A common scenario for us is a conversation that runs along the lines of “We’ve got a viable business but we just can’t keep on top of our debt repayments”

Voluntary Arrangements come in many shapes and sizes, and can be put in place for individuals (IVAs), partnerships (PVAs), LLPs or limited companies (CVAs).  One of the key benefits of a voluntary arrangement is that it can enable a person or business to avoid bankruptcy or liquidation and continue to trade, whilst perhaps paying funds to creditors over a number of years.

Rather than look in detail at the ins and outs of how voluntary arrangements work, we thought it may be useful to give some practical examples of how we have utilised voluntary arrangements to help local businesses to continue to trade.  Whilst everyone would rather avoid being in a position to need assistance, trading on using a voluntary arrangement is more often than not a good deal for creditors as well as keeping businesses trading and generating an income, and keeping staff employed.

Pubs / Restaurants – This market is tough at the moment.  We have had many examples where we have been able to utilise a voluntary arrangement to allow the owner an extended time to sell a property, and giving some relief from the immediate pressure of creditors.

Asset rich, cash poor – The old adage about cash being king is as relevant now as it ever was.  We have had numerous businesses come to us that have significant assets (haulage wagons, investment property, agricultural land, plant and equipment) but very few  liquid assets for working capital.  We’ve used voluntary arrangements to give protection and allow the business or individual to sell assets, realise equity, and repay creditors over extended periods of time.

Business needs a fresh start – In many cases cashflow difficulties prompt an honest review of the business, and provide a good time to assess staffing levels, look at overheads, contribution rates, bad debts etc.  If a business has a good ‘core’ business then a VA can be a mechanism to allow the owners to focus on moving it forward without being dragged down by  creditor pressure.

As mentioned before there is no magical “one size fits all” for voluntary arrangements, but if you would like to know anything more about the procedure, or whether it is relevant   for any of your clients or contacts please call Jackie Kirsopp or Carol Tindal at Dodd Rescue.

Greater protection for staff and small suppliers in insolvent businesses

Last week the Government announced plans to improve the UK’s corporate governance framework by launching a consulation to improve the UK’s corporate governance framework and ensure the highest standards of behaviour in those who lead and control companies in, or approaching, insolvency.

These reforms seek to help reinforce public trust and confidence in businesses and further strengthen the UK’s business environment.

The crackdown on directors and employers behaving irresponsibly includes:

  • clawing back money for creditors, including workers and small suppliers, by reversing inappropriate asset stripping of companies on the verge of insolvency
  • disqualifying /or holding directors personally liable when found to have sold a struggling company or subsidiary recklessly, or knowing it would fail
  • giving the Insolvency Service new powers to investigate directors of dissolved companies
  • consideration of the legal and technical framework within which decisions are made on payment of dividends, and how it could be improved and made more transparent
  • strengthening the role and responsibilities of shareholders in stewarding the companies in which they have investments

The Insolvency Service disqualifies around 1,200 directors deemed as irresponsible every year, protecting creditors from an estimated total £137 million in losses.

In the coming months the government will introduce new laws requiring:

  • listed companies to reveal the pay ratio between bosses and employees
  • all companies of a significant size to publicly explain how their directors take employees’ and other stakeholders’ interests into account
  • all companies of a significant size to make their corporate governance arrangements public

Source:  GOV.UK

Domino Effect

Carillion has been one of the largest corporate failures in this country. This, along with other failures will have a domino effect on the economy for possibly years to come.  Many subcontractors and small business within the construction industry will feel the effects in due course. It is not just the debt that is due to the business that is lost, it is also the future work that the business was reliant on.

Outside the construction sector, there are some other big failures which will also impact on the economy.

It is important to seek professional advice as soon as the business starts to feel the ripple effect.

Please contact Carol Tindal to arrange a free initial consultation if you think your business may be affected.

Credit card companies ordered to intervene to address persistent debt

Credit card companies will have until September of this year to implement rules designed to help people with longstanding debts, the Financial Conduct Authority (FCA) has said.

Credit card companies will have to intervene after 18 months of customers’ persistent debt in an effort to try to help 3.3m Britons who have long-lasting debt problems.

Under the new rules:

  • Credit card firms will contact customers after 18 months of persistent debt, suggesting they speed up repayments, with the possibility of the card being suspended if they fail to start paying back more.
  • After three years of persistent debt, the credit card company must offer customers a way to repay their balance in a reasonable period, and could cut, waive or cancel any interest, fees or charges from that point if they are struggling to repay

The FCA study analysed the accounts of 34 million credit card customers over a period of five years, and surveyed almost 40,000 consumers. Christopher Woolard, director of strategy and competition, said:

‘Under these new rules firms will have to help customers to break the cycle of persistent debt and ensure customers who cannot afford to repay more quickly, are given help.’

The new rules come into force on 1 March 2018, but firms have until 1 September 2018 to comply.

Read more

https://www.thegazette.co.uk/all-notices/content/101367

https://www.fca.org.uk/news/press-releases/new-credit-card-rules-introduced-fca

http://www.bbc.co.uk/news/business-43210246

Spring Clean: Reflect, Renew, Regenerate, Retire…

This time of year is always a great time for reflection by us and (we assume) other accountants.  The rush of Christmas and January is over, and it is time to start focusing on tax planning for clients for the coming tax / financial year.

Many businesses take the promise of spring time as an impetus to change direction, whether that be upsizing to expand or win new customers or downsizing towards retirement.

Whichever way your clients choose to go, lots of financial and taxation issues come into play – and we all need to ensure that our clients are appropriately advised.

Dodd Rescue can help support you to support your clients when change is in the air.

For company owners considering retirement and looking to access the capital they have built up, we can assist you by winding up a company on a solvent basis, to ensure that the client  takes advantage of the rules on Entrepreneurs’ Relief.

If clients are in a tight squeeze, we can put together a voluntary arrangement,  or look at other formal insolvency processes.

Our goal is to help support local businesses and the local economy, ensuring  your clients survive the tough times, or perhaps facilitating the formal winding up process if the company has come to the end of its useful life.

In all cases, we work with you to ensure you are involved in the process, and due to our local knowledge and experience, we ensure that the process is as cost effective as possible.

Ps – if you have any clients that you may be looking to wind up on a solvent basis, time is of the essence if you want to utilise the current tax year CGT allowance.

If you would like to chat though any of the above, or see if we can help your clients please don’t hesitate to call Jackie Kirsopp or Carol Tindal on 01768 864466.