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Directors Do’s and Don’ts

Published on : 16th February, 2021 | Updated on : 21st August, 2024
Keith Steven

Written ByKeith Steven

Managing Director


07879 555349

Keith is the Managing Director of KSA Group Insolvency Practitioners which has been established for 25 years. The company has undertaken more CVA led rescues than any other firm. Read our case studies to see how.

Keith Steven
worried director

Table of Contents

  • If an action or step seems wrong or smells wrong – it generally is!
  • Do
  • Don’t

This is not a complete guide to the actions you should and should not take, but it will hopefully guide you through this very difficult time.

There is one golden rule –

If an action or step seems wrong or smells wrong – it generally is!

Think hard about what your creditors might think – extenuating circumstances may seem reasonable at the time, if the company fails and you have no record of why actions were taken it is less likely that the actions will look correct.

Do

  • Follow our guides to your options. And talk to us.
  • Build a detailed picture of the company’s financial position.
  • Note down decisions taken. Where difficult decisions need to be taken outside meetings, write a note to the company saying why you took it. People make mistakes, but if the decision taken was reasonable, show why it was taken at that time.
  • Build a detailed picture of the company’s sales prospects.
  • Build a snapshot of the company’s assets and liabilities (all of them including you).
  • Hold regular management and board meetings, minute the decisions taken and file the minutes carefully (this seems common sense but is rarely done in our experience).
  • Be honest with yourself, your employees, your customers and your creditors.
  • Formulate an action plan, get your team to buy into it.
  • Take advice from professional advisors.
  • Talk to your bank.
  • Consider even the most unpalatable options.
  • Be determined.

Don’t

  • Bury your head to the problems – reading this website is a good start!
  • Guess, say financial figures don’t matter, spend lots of time building detailed accounts – they are history.
  • Blame everybody else.
  • Ignore legal paperwork.
  • Prioritise creditor issues incorrectly.
  • Make promises to creditors that you cannot possibly keep. Remember, while you may expect to be able to pay PAYE back over time, you will have to pay ongoing debts and probably cash will not come in as fast as you think.
  • Hide the issues from your people – they are the business, not just you.
  • Talk to lots of people and procrastinate.
  • Keep changing plans.
  • Lie to the bank.
  • Ignore closure as a real possibility.
  • Be unrealistic.

Most of all, DO talk to experts in turnaround. Call 0800 970 0539

Request our FREE 40-page guide for worried directors

Business Asset Disposal Relief

What is Entrepreneurs Relief? Has actually been renamed 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). For more information regarding the MVL and Business Asset Disposal Relief, see our page on 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.

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Business Asset Disposal Relief

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