The director of the company contacted Sarah Massey of KSA to discuss the company’s present financial situation. Then, after a subsequent telephone conversation with KSA regional manager, Gary Weber, a meeting was requested and held at the company’s premises.
The company operates within the medical sector.
KSA were appointed to assist with an informal Time To Pay (TTP) arrangement in early 2015. Turnover for the year to 2014, was c£175K. The company was not encountering financial difficulties and at the time was solvent. However, the company was seeking a TTP due to the Corporation Tax owed which included a large component of section 455 tax in respect of a commercial loan to the director.
- The company occupies small leased premises attached to a larger medical facility.
- The company employs 2 staff including the director.
Bank & Financial facilities
- The company had no loans, or overdraft facility and operated the account responsibly maintaining a credit balance.
- There was a separate mortgage provider for premises owned by the company. This facility was secured by a fixed and floating charge over the company’s assets.
- During the time working on this case KSA discovered that there were other registered charges listed as outstanding in relation to former facilities. KSA informed the director of this and steps were taken to have these listed as satisfied.
- The director had provided a Personal Guarantees (P.G) to the mortgage provider
Unsecured Creditor debt:
- c£45K of which HMRC was 100%
As detailed in KSA’s remit, KSA approached HMRC on an informal basis to discuss proposals for a TTP arrangement. However, this was rejected due to the presence of section 455 tax which indicted an outstanding director’s loan. HMRC would not enter into discussions with respect to a TTP arrangement until the directors’ loan had been repaid in full. As there was an outstanding loan owed to the company by the director with no strategy for repayment, HMRC would not budge on its decision.
Categories: Turnaround, What is a CVA or Company voluntary arrangement?