Insolvency Practitioners and Business Rescue

How much reliance do Directors place on internal bookkeepers to keep things up to date?

Insolvency Practitioners often help with business rescue. This is when all manner of problems can strike, leaving a company vulnerable and facing insolvency. In these situations our focus is on helping  clients avoid insolvency where possible. In this case, the problem started with an internal bookkeeper not keeping things up to date. The result was a situation that could easily have resulted in liquidation.

We were called in due to a major VAT return issue

A client sought our advice recently after finding out the company’s internal bookkeeper had not kept on top of VAT returns. After trading successfully for many years, the client was shocked to find that as a result, HMRC were about to ask for a sizeable security deposit to allow the business to continue trading and charging VAT. The security deposit was punitive and the company simply couldn’t afford to pay it.

So, despite the fact that they were trading profitably they found themselves in a position that would force the company to close if a solution could not be found. The business needed rescuing.

This is where Insolvency Practitioners help with Business Rescue

Having called us in quickly, discussions with HMRC started immediately. Contrary to what many people might think, HMRC would far rather have a business trading and paying its taxes rather than an insolvent one that can’t and might never be able to.

We deal with HMRC regularly and have good relations with them. As a result we know what they are looking for. In this case  HMRC  agreed to allow the company time to get its VAT arrears in order, along with a sensible proposal to bring its VAT arrears up to date and  avoid the need for a security deposit payment. The company is no longer facing closure. The client thought closure was inevitable. They now have a good chance of turning things around.

We have of course recommended that the Director engages an accountant to assist and oversee future returns to HMRC.

We Can Help With Business Rescue

If this business had not sought our advice, there was a very real prospect that it would have closed. Fundamentally it was a good, strong business that had simply fallen foul of poor internal governance. This is another cautionary tale for directors.

If your business is facing insolvency as a result of something similar, contact our team of insolvency practitioners at our central Birmingham headquarters, or call us on 0121 200 2962. The first meeting is free.