Plant Services Company in Scotland Not Enough Staff

The Challenge

A Scottish plant services company with a rising turnover of £150k faced financial difficulties because its director, the sole employee, was overwhelmed by both operational and administrative duties. This led to a gradual decline in financial compliance, resulting in a build-up of VAT and Corporation Tax arrears with HMRC. The director’s inability to manage the paperwork, despite his operational expertise, resulted in HMRC taking legal action and a £6,000 fine from Companies House for non-compliance. A Time to Pay arrangement with Companies House proved to be unsustainable, prompting the director to seek professional help.

The Solution

The director engaged RMT KSA to prepare a Company Voluntary Arrangement (CVA) proposal. Here not only was the debt addressed but also the root cause of the problem was tackled, by assisting in the recruitment of a part-time bookkeeper/admin assistant. This new hire was crucial for managing ongoing financial tasks, including cash flow forecasts, management accounts, and VAT returns, which allowed the director to focus on his area of expertise.

The Results

The CVA was successfully approved by creditors, including HMRC, at a meeting in Glasgow in September 2013. The CVA offered a dividend of 85p in the pound, a significantly better outcome for creditors than the 10p they would have received in a liquidation. The CVA not only saved the director’s job but also created a new part-time role, providing a sustainable and more positive future for the company.