There is some – at least, anecdotal – evidence that HMRC have recently been making much greater use of their powers to make directors personally liable for the national insurance debts of their failed companies. The power derives from section 121C of the Social Security Administration Act 1992, which allows HMRC to issue personal liability notices (PLNs) when a company has failed to pay NI contributions and that failure is “attributable to the fraud or neglect of one or more individuals who were, at the time of the fraud or neglect, officers of the company” (known as “culpable officers”).
Recent years have seen a growth in the number of unqualified, unregulated so-called “insolvency advisers”. Frequently the advice given is, to say the least, decidedly dodgy, and the Insolvency Service is conducting an ongoing operation looking at such businesses.
There’s no doubt that we are living in extraordinary – perhaps unprecedented – times. Scarcely a week seems to go by without news of another company failure – retail company failures seem to have been particularly in vogue, with Blockbuster Video, HMV, Jessops and Comet all falling into administration in the last few weeks.
Kodak may well have sought insolvency advice recently, the company has suffered financially over recent years, competitors have quickly over took the once market leader, as they have moved forward increasingly with the digital age. Kodak recently filed for bankruptcy protection, to allow it time to assess its position without having to face looming creditors and hopefully take the essential and necessary steps to allow it full corporate recovery.
Corporate recovery and insolvency advice could benefit as many as 80% of UK businesses, this is the percentage of companies that face some form of financial difficulty in their life cycle. There are a million and one factors that can affect a company’s financial well being, which can include anything from the external issues of a poor economic climate, to a poor business strategy. Here are the top causes behind business bankruptcy.
Many businesses have been faced with seeking insolvency advice as the tough economic climate forces many companies out of business or at the very least into financial crisis.
Official statistics from the Insolvency Service revealed that during 2011, there was an increase of between 2% and 4% of businesses going into liquidation, when compared to the year before. The figures for UK businesses were in contrast to that of individuals.
If you’re chasing recalcitrant company debtors this may be a useful case to have up your sleeve. For directors of debtor companies it’s a clear statement that they can’t simply disregard their creditors and hide behind the security of the limited liability of their companies.