What can you do to save your company.

Latest figures show that many companies are struggling to pay their deferred tax bills. 

So what can you do if your business is suffering?

• The first thing that should try to be achieved if your problem is paying any debt to HMRC is to liaise with them, possibly with the benefit of an accountant to negotiate a Time to Pay Agreement.  Failing that, if the problem is one of cash-flow because of the business own debtors not paying on time then the business needs to assess its own credit control procedures in order to make sure that cash-flow is boosted so that any debts to any creditors can be settled before any petition against you or the business is presented.

• If a statutory demand or winding-up petition is presented and served against you or your company, you need to act quickly to set aside the demand (if you are an individual) or apply to have the petition struck out and advertisement restrained if you genuinely dispute the debt. Once a bankruptcy order or winding-up order is made, it is difficult to have them set aside or annulled. There are strict time limits within which you must act to ensure that the demand is set aside or petition struck out. If you need time to pay you may be able to agree an adjournment of the hearing with the other side and the sooner you request the adjournment the more likely it is it will be granted.

• If you are able to make payment, give the creditor as much information as possible to show that the debt can and will be paid.

• If your business is in dire financial straits then you should consider taking advice from a solicitor specialising in finance and restructuring expert or an insolvency practitioner who can advise you on the best course of action to take.  That may involve placing your company into administration, a voluntary arrangement, liquidation or if you are an individual, bankruptcy or entering into an IVA (Individual Voluntary Arrangement) or some kind of informal agreement with your creditors.  The key is to act quickly and take expert advice before it is too late.

• If you are a director of a company and are aware that the company cannot pay its debts as they fall due, then you need to take great care that you do not breach any directors’ duties or commit the offence of wrongful or fraudulent trading.  Again, it is imperative to take advice sooner rather than later.

• There are alternative funding arrangements available to businesses by way of secured finance or asset based lending whereby an invoice discounting agreement or factoring facility can be granted to a business in exchange for an assignment of all the invoices due to the business by its customers.  This has the ability to ease the businesses’ cash-flow because as soon as your invoice is prepared and sent to your debtor, rather than having to wait 30 days to be paid by your debtor, you get paid a certain element of the invoice by the finance provider and the balance upon settlement of the invoice less the finance provider’s charges.  A solicitor, finance broker or an insolvency practitioner can put you in touch with a relevant finance provider.