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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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APNs and advising your clients

APNs (Accelerated Payment Notices) have been around for a while now since HMRC acquired power to issue them in 2014/2015.  These, coupled with follower notices, and attacks on disguised remuneration packages demonstrate HMRC’s determination to “up the ante” and increase the tax take from those they feel have flouted the rules.

The creation of HMRC’s Counter Avoidance Insolvency Team has further emphasised the need for your clients to be correctly advised should they receive any sort of demand of this type. Can an Insolvency Practitioner Help me?

Both APNs and follower notices give the taxpayer a very short period of time to pay the tax due. So for example, as far as APNs are concerned, they are issued when HMRC identify a relevant scheme and provide a window of just 90 days to make payment.  They aim to put the taxpayer back into the position they would have been in, had they not participated in the tax avoidance scheme, whilst the outcome of the enquiry into the scheme is determined.

So if the taxpayer has the money to settle the liability, then there is no need to take insolvency advice. However, if the client is struggling to pay, they need to act fast.

HMRC will act quickly to recover sums due, but will take an active interest in any insolvencies that appear to be put in place simply to avoid paying the tax.

It is likely that the tax scheme giving rise to the demand will have been entered into by higher earning individuals. It may therefore be that significant assets  exist, perhaps  in the form of investments or  property.   However this is not always the case, and, in extreme cases personal  bankruptcy procedures may need to be considered.

Directors of companies receiving demands need to be mindful of their general legal duties to act in the best interests of creditors as a whole if the company cannot pay the tax due.  In particular, HMRC may take the view that the uses of such tax schemes constitute an act of “misfeasance” as defined by section 212 Insolvency Act 1986.

The clients therefore need to consult with an insolvency practitioner at the earliest opportunity to see if some form of insolvency or rescue process (company voluntary arrangement, administration or liquidation) may be the best option.

If payments are not made by the due dates, penalties are strict, with surcharge levels starting from 5%.

So in summary……

If you or your clients are worried about the impact of an APN (and/or a follower notice), please contact us.  Our insolvency and tax team can work together to ensure that you get the best advice possible. Please call Jackie Kirsopp or Carol Tindal on 01768 864466 to find out more.

Credit Control – Getting in the cash (cheque or direct debit…..)

Here are some hints and tips for credit control and collecting the sums owed to you. 

Get it right from the start. Know exactly who you are dealing with.  Partnership, sole trader, limited company? Ask new (and existing) customers to complete a credit application form as part of the signing up process. If they don’t pay you need to know whom to chase. Check they are solvent! Take a deposit or ask them to set up a monthly direct debit from the start.

Terms and conditions. Set terms and conditions and stick to them. Payment terms – 30 days? Retention of title over goods supplied. Credit limits. Charging interest. Time to raise disputes. Payment on completion of service or supply of goods etc. This can be a legal minefield, we would strongly recommend that you consult a solicitor.

Systems and procedures. Set up a procedure and stick to it. Make sure all staff are aware of the procedures and follow them. Send invoices out as soon as possible.  Follow up with a statement or gentle reminder at the end of the month. If your payment terms are 30 days start chasing the outstanding debt on day 31. Get tough – do not let them get away with it, it is your money. Resolve any disputes as soon as possible.

Court Action. If all else fails commence court action. Send a final warning letter following the pre action protocol. Follow it through, do not make empty threats. The court system is relatively simple. For small debts, you can do it yourself online. If the debt is large or not straightforward please consult a solicitor. Your costs and interest are recoverable from the customer.

Interest. If you do not have the right to charge contractual interest under your terms and conditions (see above) you can still charge interest under the Late Payment of Commercial Debts (Interest) Act 1998. This only applies in business to business transactions. The rate is 8% above base and you can charge compensation for late payment of the debt.

Spotting problems. Bouncing cheques, payments on account,  a change in routine, excuses like the cheque is in the post…..

If you would like assistance with your credit control procedures or are struggling with slow paying customers, contact Carol Tindal on 01768 864466 or email carol@doddrescue.co.uk

There’s too much month left at the end of the money!

Do you or do you have clients / customers that are having difficulty meeting their credit commitments by the end of the month?

Nothing left to live on after the mortgage and loan repayments have been paid?

Burdened with credit cards and store card debts?

Threatening letters from debt collectors?

If the answer to any of these questions is “yes” then you or your clients need to speak to someone about their financial options.  In particular we find that we are increasingly advising directors of limited companies about the personal financial implications of the Companies Act 2006.

If you feel that you or any of your clients would benefit from a chat about their financial circumstances, then Dodd Rescue offer a free half hour consultation to offer guidance on the choices available.

If you are interested, contact Carol Tindal or Jackie Kirsopp on 01768 864466

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