What is a CVA? | Company Voluntary Arrangements Explained
A CVA or Company Voluntary Arrangement is a legally binding agreement with creditors allowing a a business to pay back a proportion of its debts over time
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What Is A Winding Up Petition By HMRC or Other Creditor
Learn what a winding-up petition is, when it's used, and the legal process involved. Read our comprehensive guide written by licensed insolvency practitioners
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I Can’t Pay My Company PAYE Bill – Will HMRC Give Me Time To Pay?
What happens if we can't pay our PAYE bill to HMRC on time? What can we do? There are a number of options that you can consider such as a debt management plan, time to pay arrangement or even a CVA if your business is viable but just behind on HMRC tax payments. Most importantly though you must act.
ReadI Can’t Pay My VAT Bill – Will HMRC Give Me Time To Pay?
What happens if we can't pay our VAT bill to HMRC on time? What can we do? There are a number of options that you can consider such as a debt management plan, time to pay arrangement or even a CVA if your business is viable but just behind on HMRC tax payments. Most importantly though you must act.
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Guide To Liquidation Fees
The costs of liquidation start at around £4000 + VAT. This would be for liquidating a company with a single creditor, such as having an unpaid Bounce Back Loan (BBL) or HMRC. For more than one creditor issue, we would expect the fee to be approximately £4,400 - £6,000 plus VAT.
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Late Payment Of VAT – What Are The Penalties
Paying VAT late will result in a penalty, known as a "default". HMRC work hard to ensure every company pays its VAT and tax obligations on time because the money belongs to the taxpayer. Continually failing to pay VAT on time can lead to legal action, for example, a winding up petition issued by HMRC. The petition is advertised publicly and in the worst-case scenario could force the company into liquidation. What are the consequences if I miss a VAT deadline? If your company turns over more than £150k and misses its first VAT payment deadline, you will be sent a ‘Surcharge Liability Notice’. If your company fails to pay on time for the next 12 months, HMRC will impose penalties depending on the VAT amount.If your company has a turnover of less than £150k, HMRC will send you a reminder letter about paying VAT on time. If you miss another payment deadline within the next 12 months, you will then be sent the Surcharge Liability Notice and be put into the penalty process.If the company defaults, HMRC will notify you of any surcharges. A surcharge is a percentage of the tax that has been paid late. Have you been issued a penalty for late payment? This is of course, something you wish to avoid. However, if you do become subject to a penalty, there are different categories for your fine to fall in to. Ultimately, it depends on the amount of times you have fallen behind on your payments and the company turnover. See the table below:Number of Late Payments Penalty for companies with turnover up to £150,000 Penalty of companies with turnover in excess of £150,000One None NoneTwo None 2% of unpaid VAT (or £400 whichever is highest)Three 2% of unpaid VAT (or £400 whichever is highest) 5% of unpaid VAT (or £400 whichever is highest)Four 5% of unpaid VAT (or £400 whichever is highest) 10% of unpaid VATFive 10% of unpaid VAT 15% of unpaid VATSix+ 15% of unpaid VAT 15% of unpaid VATA daily interest rate of 2.75% will be charged on to the balance of any late payment, so be warned. Until you can pay off the debt, this will continue being charged. How can I prevent late VAT payments? There are several ways to prevent late payments from happening, or becoming a severe problem. If late payments are a recurring issue, cash flow and general financial management must be addressed. Conducting a business review or audit will help pinpoint cash flow problems.If your business is struggling, consider asking for a time to pay deal (TTP) with HMRC. This plan allows the company to repay the debt over a few months, or up to a year, in affordable instalments. This could be referred to as a VAT debt management plan.Call us now on 0800 9700 539 for help with VAT payment problems. What are the available options for late VAT payments?Enter a VAT debt management plan or time to pay arrangement with HMRC Get a VAT loan but be careful this is not just putting off important decisions Propose a Company Voluntary ArrangementAs experts in turnaround and insolvency with over 20 years of giving advice we are able to spot the issues, set out a plan and guide you, if you need it. We are also licensed by the government to act as insolvency practitioners so we MUST give correct, proper and relevant advice.Can you re-finance the company or business? Is there a way to raise money from a bank loan or factoring company for example? Is it possible to replace that factor?Can you put personal funds into the company? Warning : make sure that the business is VIABLE in future before doing that.Ask for time to pay the debt or a TTP as we call it. HMRC provides a "Business Payment Support Service" (BBPS). Using this service, all businesses with cash flow problems can request a Time to Pay arrangement with HMRC. You can call the HMRC's Payment Support Service on Tel 0845 302 1435.HMRC will want to know why you are not on time with paying VAT. The collector will ask questions like:What are your plans? Why has the debt come about? Has a bad debt occurred? Have you spoken to the bank and asked for help there? Can you put money in?Depending on why you can't pay, how long you need to pay the arrears of VAT owed and your payment history - HMRC may allow you a few months to pay the debt off. Warning; usually all future tax debts (including corporation tax, PAYE and NIC) must be paid on time or the TTP will fail.If a TTP is not affordable then maybe a Company Voluntary Arrangement (CVA) is an optionWe can arrange a CVA or company voluntary arrangement. This will take the pressure off straight away! A CVA is simply the best way of restructuring a company's debts available and the good news is you stay in control of the company. See our VIDEO on CVAs here. The CVA option allows tax debts to be partially written off. It also allows you to cut costs, make redundancies and plan the turnaround of the company. Will that solve your problems?If a threat of a winding up petition is made by HMRC then an Administration or pre pack administration solution can be a great solution. Pre Pack administration is a powerful way to protect the business assets and sell them to a new company formed by you or a trade buyer for example. This will protect the company from aggressive legal action of HMRC like winding up.If the company is simply never going to be viable, then you should carefully consider creditors voluntary liquidation, this effectively closes the company down and may help protect the directors. Read more here on liquidation.If your business is constantly building up arrears of VAT this is a failure to comply with the law and also makes HMRC tax collectors think that the company is insolvent. So, you need to act properly and responsibly and deal with this serious threat to your company. Will I be personally liable for the VAT? Remember that if the company is insolvent, and if it goes into liquidation in future you could be personally liable for the debts, if you continue to trade, whilst doing nothing about the problems that it faces. If you KNOW the company is insolvent and you make the creditors' position worse, then in a future liquidation you can face personal liability for the debts you took on.Our advice is always to act quickly and carefully, get expert advice from us, keep notes of any discussions and decisions and always write down the names of people you speak to at HMRC. Finally, don't wait too long to get professional turnaround help. Call the HMRC debt experts on 0207 887 2667 or 0800 9700539 or email our advisors on help@ksagroup.co.uk
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Can I Liquidate My Company Myself?
The answer is no, you cannot liquidate your own company, because you need to be a licensed insolvency practitioner to liquidate a company! So, how do you quickly get your company liquidated? If the company IS insolvent then the company directors need to decide if the business is viable. If it is not, it should be quickly liquidated.Here are the 5 steps you need to go through:Step 1 Find a Liquidator. We can help as we have a number of insolvency practitioners across the UK. Uniquely to KSA, you can speak to one of our IPs TODAY. Call on 08009700539.Step 2 - Pass details of any company assets over to the proposed liquidator, and our valuers may get these valued. This will independently set the value of the assets for going to auction, or you may wish to buy them. Step 3 Let us know who the company owes money to (creditors). KSA will write to them all to let them know whats happening and tell them that a creditors meeting will be held. The meeting can now be held online or phone as physical meetings are no longer mandatory. This will quickly remove creditor pressure from you and they will start talking to KSA instead!Step 4 Give us all company information and books and records. KSA will give you a list of all the information we need in order to liquidate your company. This information will allow us to prepare the necessary reports for the creditors. Step 5 A company director needs to "chair the meeting of creditors". In actual fact the liquidator will run the meeting but you or one of your directors must attend it by law.Call KSA now and we will get you talking to an insolvency practitioner today! If the company is solvent but you just want to get the money out then you can do an Members Voluntary Liquidation (MVL).
ReadHow Much Does It Cost To Liquidate A Company?
If your company is insolvent, then you are likely to be concerned about the costs of liquidation.The cost of liquidation depends on the complexity of the case. This is based on factors such as;Whether the company is trading or not. Number of employees Number of creditors, and how much it owes them Value of its assets, including money it is owed by debtors Director and shareholder profile The quality of the financial information available.How Much Does A Liquidation Cost? Generally, the costs of liquidation start at around £4000 + VAT. This would be for liquidating a company with a single creditor, such as having an unpaid Bounce Back Loan (BBL) or HMRC. For more than one creditor issue, we would expect the fee to be approximately £4,000 - £6,000 plus VAT. For more complex issues including companies who have landlords, employees, BBLs and supplier debts we will provide a written quote after our meeting with the directors to discuss the company’s options. Do get in touch to discuss your company’s liquidation, don’t delay and hope the problem will go away!Be wary of websites (not actual insolvency practitioners) saying they can do it for £1500 or so - this is for sure, too good to be true. The cost of the liquidation may be lower but the risk to you personally is very high, especially if you owe the company any money. Additionally, you will probably end up dealing with all the creditors and will find it difficult to move on. Liquidation is heavily regulated and there are no shortcuts. You may also be asked to sign personal guarantees.Here, we’ll explain how much voluntary liquidation costs, so you know exactly what to expect if you’re in a situation where you need to consider it. When Should I Consider Voluntary Liquidation? Voluntary liquidation is when a company’s directors choose to close the company down and disband. The process is quite straightforward:First, the company appoints a licensed insolvency practitioner as the liquidator, Then, control of the company is handed to the liquidator and the business ceases to trade, The liquidator sells all of the company assets, The liquidator removes the company from the Companies House register.There are two core types of voluntary liquidation, so it’s important to understand which one your company is facing.Members’ voluntary liquidation – This occurs when the company has enough assets to cover its debts. The directors must make a declaration of solvency before proceeding. Creditors’ voluntary liquidation – This is a popular method for closing down insolvent businesses. 75% of creditors must agree with the liquidation proposal put forward at a creditors’ meeting.It is important that directors assist their liquidator in all areas. They must hand over company assets, records and paperwork, and agree to interviews if requested.In a creditors’ voluntary liquidation (CVL) it’s important to remember that the liquidator acts in the interest of the creditors, not the directors. If the liquidator finds that a director’s conduct was ‘unfit’, the director could face fines, or even disqualification for 2-15 years. What’s Included in the cost of voluntary liquidation? This covers the cost of hiring an insolvency practitioner to act as liquidator and organise the creditors’ meeting. It also includes the preparation of the statement of affairs and section 98 reports.Further liquidation costs will accrue as the process moves forward. This is because the liquidator will perform a wide range of duties during this time, which include:Advising directors of their duties Settling legal disputes or outstanding contracts Making people redundant and processing their claims Collecting debts, including those owed by company directors Meeting deadlines for paperwork and keeping the relative authorities informed i.e. Companies House, HMRC, Insolvency Service and Department for Business, Energy, Innovation and Skills Investigating transactions prior to the liquidation to check for discrepancies and obvious preferences/undervalued transactions Alerting creditors to progress every 12 months and involving them in decisions where necessary Valuing and realising assets Distributing monies to creditors and accounting for themThe cost of voluntary liquidation – excluding the initial fee – is charged according to time spent, usually over a period of five years. How do companies pay for voluntary liquidation? Proceeds from the sale of the company’s assets usually pay the costs for three different areas:The cost of voluntary liquidation Money owed to creditors Shareholder debtsHowever, the second and third tier only receive funds after payment of the cost associated with the previous tier. Therefore, as the process continues, it could become increasingly unlikely that shareholders will receive the full amount owed to them.Sometimes, the cost of voluntary liquidation cannot be met through the sale of assets. In such cases, liquidators will require payment in advance.When this occurs, or directors require a more efficient process, directors often pay for liquidation out of their own funds.The cost of voluntary liquidation can be daunting, but this process is the correct way to close an insolvent company and stop the position getting worse. It can help protect directors from wrongful trading accusations, stop the risk of personal liability, ensure all staff are paid compensation quickly and perhaps most importantly spare the director time to get on with their life.
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Winding Up Petition in Scotland
We are a Scottish registered company and a creditor has threatened a winding up petition. Is the procedure in Scotland different to that in England? Yes. If a creditor issues a winding up petition your options are even more limited than in England. The reason is to do with the advertisement of the petition. To summarise, in England after the Winding Up Petition has been served, advertising cannot take place for seven days. (Please note that for the Petition to proceed it must be advertised no less than 7 days after service and at least 7 days before the Hearing). It is the advertising that can be the end of the company. Banks have a continual watching brief on the Gazette, where it is advertised. Once advertised they will almost certainly freeze the company's bank account, often the end of the company.The reason behind the freezing is logical. If the WUP is ultimately granted, any dispositions which took place after the service of the Petition can be claimed by a liquidator as void, or voidable. This is because the legislation allows the Liquidator to claim back any monies paid out which he or she determines were not in the interest of creditors as a whole. In that event, the bank will be required to repay any such dispositions (payments). The freezing of the account itself is not a legislative requirement as such, it is merely a mechanism used by the banks to protect their position against possible claims by the Liquidator. In Scotland however: The Winding Up Petition (minimum debt in Scotland £10,000) dates from the presentation of the Petition at the court offices; when it is lodged. At this point a First Order is given. This First Order is the authority to serve and advertise. At the same time, it is ‘Walled’. This is the damaging part! Walling literally means the the Notice is pinned to the Court notice board for all to see...including the company’s bank! What do the bank do on spotting the walled petition? Freeze the bank account...immediately!Whilst the respondent has 8 days to lodge defences, there is NO delay period for advertising- the Petition is advertised at the same time as service and, more damagingly, it is Walled immediately. So in this case, if the bank has spotted this (and they will...remember they hold a watching brief on all wallings) and frozen the bank account, how would a director or board of directors manage to pay staff, pay suppliers for on-going stock, or pay lawyers and advisors to help prepare an answer to the petition and a CVA proposal? Sadly the answer is often, they cannot and the company is fatally damaged by this knock out blow and not even make it to the lodgement of answers resulting in an Interim Liquidator being appointed by the Court, leading to Liquidation.One unfortunate side effect of this loss of grace period is that a petition may be issued maliciously and so damage the company. We advise clients in Scotland to lodge a caveat in both their local Sheriff court and the Court of Session. The effect of the caveat is that the court is required to notify the party who has lodged the caveat of the intention to proceed with the Winding Up. Then a Hearing will be fixed. If it is in a busy Sheriff court then the hope is that the Hearing might be a few weeks off. In a less busy court the opposite is the case. The important point is that some notice is given which will allow directors the opportunity to prepare answers and a proposal to put to creditors for the repayment of debt over time while the bank account is operational. This is obviously vital for the company to continue to trade during this time. A WUP can be the death knell for any company, especially so in Scotland so it is vital to lodge caveats, as a matter of course, and act quickly if you sense a petition may be about to be served. Often there is a solution – the trick is to apply it before a Petition is lodged.So if you feel under threat then DO NOT DELAY and talk to Eirlys Lloyd our expert advisor on these matters on 0131 242 0081 or 08009700539
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How To Issue A Winding Up Petition Against a Debtor Company
How do I issue a winding up petition. A guide to procedure and costs of issuing a petition on a company to recover debts. When to use it and when not to.
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What is Business Asset Disposal Relief? Business Asset Disposal Relief which allows you to pay less capital gains tax, at 10% on gains of all qualifying assets which are sold. It is applied when you sell your business, and usually in a Members Voluntary Liquidation (MVL). Capital Gains Tax is the tax on profit when you are selling something which has increased by value. Am I eligible for the relief? To qualify for Business Asset Disposal Relief , you must meet one or more of the following criteria:You must be disposing all or a part of a business, where you were a sole trader or business partner. Even if you dispose of the assets after, you are still eligible. However, you must own the business for over a year before you sell it and if you are closing the business, the assets must be sold within 3 years. You have at least 5% shares, securities or voting rights within the company being sold. You are also eligible if you have had the chance to buy your shares at least a year before the sale. For this, you must have been an employee of the firm for at least a year, and the company must be one which focuses on trading, instead of those which involve little trading, for example, those who focus purely on investment. You lent an asset to the business and it is being sold. This only applies if your assets were used for a year before the shares were sold, or if you have already sold 5% of your part of the business or shares. You’re selling shares which you got through an Enterprise Management Incentive scheme, after the 5th April 2013.How do I work out the tax I will have to pay?Work out the gains of all the qualifying assets Add all the gains together (deduct any losses) to get the total taxable gain available for Business Asset Disposal Relief Deduct any tax-free allowance You will pay 10% tax on what is left.How do I actually claim for Business Asset Disposal Relief ? To claim for Business Asset Disposal Relief fill in Section A of the Entrepreneurs’ Relief Help sheet here https://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet , or you can do it via your Self-Assessment tax return. During your lifetime you can claim up to £1 million relief, with no limit on how many times you can claim for it.Following the first Labour Budget it has been it has been confirmed that the relief remains but from April 2025 the rate will go up to 18% from the current 10%
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Can I Sell My Company’s Assets Prior To A liquidation
Yes you can sell or transfer assets prior to insolvency but you must make sure that the assets are valued correctly and a fair price is paid. Otherwise you run the risk of the transaction being reversed by the liquidator.
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