The company was run by a sole director who liked nothing better than getting in his lorry and driving! He was not interested in the paperwork side of the business. With no internet connection in the office, the part time book keeper was very limited in what she could do. Director was determined to turn the company around and ensure that he was fully compliant going forward.
What was owed?
The company owed HMRC c. £44k split between PAYE and VAT. Much of the liability was down to surcharges or penalty charges due to the director not filing his returns correctly. PAYE debt went back to 2009 and VAT back to 2007. The only other creditor was Companies House who were owed some £3k for late filing.
With the age of the debt and the compliancy issues there was a concern that HMRC would reject a company voluntary arrangement.
So what did we do?
Our regional manager managed to persuade the director to install the Internet and arrange for the bookkeeper to come in more often to ensure paperwork was kept up to date.
The CVA took longer to file than expected due to the poor cashflow of the business. In addition, we had to supply a draft document to HMRC in May to request that they didn't wall a winding up petition against the company. For more details on this please refer to our page on winding up petitions in Scotland.
HMRC approved the 100p in £1 CVA with the modification that the connected creditors wrote off their debt once the CVA had been approved, the CVA had indicated that the connected creditors would convert their liability to redeemable preference shares and convert them back once the CVA had been completed (5yrs) and the company was in a position to make the payment.