The right advice

It would be wrong to imply HMRC simply agree to TTP upon application. PBC Business recovery and insolvency practitioner

It is not very often I agree with the media when they are talking about insolvency matters, but the Panorama documentary broadcast on 24 July found me shuffling around on the sofa, while muttering in horror and frustration!

Why?  Because if you watched, the subject was people who are struggling with debt being persuaded to enter into an individual voluntary arrangement (“IVA”).  One lady who owed £17,000 was on maternity leave when she agreed to pay £185 per month into an IVA.  Another chap owed £8,500 in total and was on benefits.  Both picked up advertisements on social media and were “Sold” an IVA like someone would sell a car, or some other goods.

Had those victims cited in the Panorama broadcast seen an insolvency practitioner or a recognised body such as Citizens Advice Bureau they would have received advice on the range of options available.  In short, these are:

OptionDebt parameterAsset parameterDuration
Debt Relief OrderLess than £30,000Motor vehicle worth less than £2,000 Savings/other assets less than £2,000 Surplus income less than £75 a month12-months but can be extended.
Debt Respite Scheme (standard breathing space)No limit – restricted to qualifying debt, such as credit and store cards.No parameter citedUp to 60 days protection
Debt Respite Scheme (Mental health crisis breathing space)No limit – restricted to qualifying debt, such as credit and store cards.No parameter cited30 days after the mental health crisis has been resolved.
BankruptcyNo limitationNo limitationAutomatic 12-month discharge period. Can be extended up to 15 years where wrongdoing arises, or it is classed as a “Second bankruptcy”.
IVANo limitation, although questionable for debts less than £30,000No limitation, but generally best entered into where there are assets to “protect”.Generally, payment in full or a 5-year period, whichever comes first. Often varies, depending upon the circumstances.

As Panorama mentioned, people who are struggling with debt are at their most vulnerable and accordingly, easily persuaded by someone offering them a way of resolving their troubles.  At PBC, we strongly advise people to seek early advice and by way of a face-to-face meeting with a qualified person, whether that is a member of our experienced team or the likes of Citizens Advice Bureau or the Council Financial Advisory.  Do not place your life in the hands of someone on a social network (which is likely a paid for advertisement being funded by referral fees) and comments on the end of a telephone.  Get the right advice to suit your needs.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 (Northampton) or 01908 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

I HAVE BEEN MADE REDUNDANT – WHAT ARE MY RIGHTS?

Unfortunately, redundancy is an inevitable aspect of a company entering into an insolvency process.  This article aims to clarify the four main claims employees can make against the company, most if not all will be paid by a government department called the Redundancy Payments Service (“RPS”)

The claim to the RPS is completed online and the insolvency practitioner acting in relation to the company will provide details on how to apply, what information the employees will require, and a case reference number.  In a recent change to the process, this code cannot be obtained by the insolvency practitioner until after the company enters into the insolvency process and this may be up to three weeks after being made redundant.

All claims paid by the RPS are subject to a weekly limit which changes every 6 April.  The current limit which runs until 5 April 2024 is £643.00. 

Wages – Arrears of Pay

An employee can claim up to 8 weeks arrears of pay, based on their weekly salary rate, subject to the weekly limit referred to above.  If an employee is owed more than 8 weeks, the best 8 weeks can be chosen.  Tax and national insurance will be deducted before the payment is made.

Holiday Pay

An employee can claim for holiday pay taken but not paid and accrued holiday which has not been taken.  For the purposes of these calculations, an employee’s holiday entitlement (including bank holidays) is taken to have accrued evenly since the start of the holiday year. 

For example if an employee who had 20 days holiday plus bank holidays was made redundant after three months of their holiday year, they would have accrued a quarter of the 28 days (i.e. 7).  If the employee had taken less days than this (including bank holidays) they would be able to make a claim for the remainder.  Should the employee have taken more, it is unlikely they will be made to repay the difference.

Holiday pay claims can be for a maximum of 6 weeks, again capped at the weekly limit and tax and national insurance is deducted.

Redundancy Pay

An employee can claim for redundancy if they have worked for the Company for more than 2 years. The amount that can be claimed depends on the employee’s length of service and age.

  • Each complete year aged 18 – 22 equals half a week’s wage per year.
  • Each complete year aged 22 – 41 equals 1 week’s wage per year.
  • Each complete year aged over 41 equals 1.5 week’s wage per year.

Again the employee’s wage is capped at the weekly limit but here unlike wages and holiday pay, this is paid tax-free.

Pay in Lieu of Notice.

If a company which was continuing to trade were to make certain employees redundant, the company would be required by law to give the relevant employees notice of their redundancy and pay the employee their weekly wage during this period.  It is likely that in an insolvency process this notice will not be given and therefore the employee can claim for the wages they would have received.

The statutory notice period is one week per years’ service (from a minimum service of 1 month) up to a maximum of 12 weeks.

Employees should note that this claim is a compensation claim and is based on what happens during the employee’s notice period.  At the end of the relevant period, the employee will be invited by the RPS to complete a further online form detailing their earnings (or more importantly their potential earnings) in the period.  Therefore, if the employee starts a new job during their notice period, this income will reduce their claim.  Furthermore, all employees who are made redundant are likely to be entitled to benefits including job seekers allowance.  The RPS will deduct these benefits from this claim even if they are not claimed so our advice to any employee in this situation is to claim as soon as possible.

It is important to note that this article refers to the claim an employee can make against the RPS.  This is the most likely method for being paid and certainly the quickest.  Where an employee is paid more than the weekly limit or has extra entitlements above the statutory limits referred to above in their contract, they will have surplus claims which can still be made against the company in liquidation.  However, here, payment is dependent upon realisations in the liquidation and will therefore be uncertain.

The published guidance from RPS is they aim to pay the claims within six weeks so if this delay will result in financial pressure for you our advice is to contact your creditors and explain you have been made redundant.

If any employee who has been made redundant has any queries regarding the above they should contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton),  01908 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

A problem shared………by Claire Goodacre

Claire Jamie. cropped

When I talk to my friends or I’m out networking it is often difficult to describe or summarise what I/we at PBC do, or the benefits of an insolvency practitioner.  We are often called vultures or undertakers.  There are many casualties of a company going bust, money is an emotive subject, and every party is a victim of some sort which no-one wants to become.

Before meeting us the ‘directors’ of the companies we meet are bearing the brunt of the pressure and experience high levels of stress.  They are trying their hardest to survive in the best way they know.  It is difficult to make the decision to seek help or admit that it is needed. 

When they do decide to seek advice, this often relieves that stress, even just talking it through and putting things into perspective is a weight off their shoulders.  Last week, Ian Cooke and I met with a director and the change in emotions was visible to see.  Their emotions moved from ‘agitated and uptight’ to ‘relieved’ and more ‘relaxed’ during the time we spent with them. 

Often people forget that financial difficulties could affect all of us and it could be one of many factors that tip that balance from successful and profitable or treading water, to being unable to pay your debts as and when they fall due.  Just one bad debt or loss of major customer amongst other things just a few of the examples.  A director has additional responsibilities and worries, such as ensuring their staff are paid along with adhering to their statutory duties.  They have often put their own cash in to survive, are the first to not get paid and have put their own blood and sweat into a venture only to see it potentially fail.

This is why my advice would always be to seek advice at an early stage.  It may not be as bad as you thought, and if it is, a problem shared is a problem halved in any event.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton),  01908 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

#insolvencypractitioner #liquidation #northampton #miltonkeynes

How confident are you?

Settlement Agreement

As is typical of the media, they regularly report UK insolvency figures and how they appear to be rising.  However, there are two things that are not mentioned in their reporting.  The first is putting insolvency figures into perspective, by comparing corporate insolvencies with the number of active businesses in the UK.  The second statistic that never gets reported is the number of solvent liquidations.

A solvent (or a members’ voluntary liquidation) is a tax-led winding up of a company where there will be a return paid to shareholders.  It could be the company was a single-purpose vehicle or, simply a successful business that is being brought to an end due to the retirement of its owners.

The first thought must be that it is a real positive as business owners can retire, having paid all of the company creditors and they are the beneficiary of funds to assist (or facilitate) retirement.  However, on the other side of the coin, you could argue these are the people who have a proven record of having a good business acumen; a skill we are losing.

In some recent research, it was suggested 23% of business owners have hastened their plans to wind down or sell.  The report suggests the expediting of activity has come from an uncertainty on where the UK economy is heading.  That uncertainty covers many areas, but is primarily the legacy of Brexit, COVID-19 pandemic and the threat of a government change, where changes in policy and taxation are a real threat.

Confidence is often dismissed as a business quality and there can be no doubt business confidence has taken a beating over these past three years.  However, before you launch into a solvent winding up you should plan ahead, both in terms of how best to wind down the affairs of your company (whether that is a sale, succession planning or closure) and your own personal tax position.

At PBC we are seeing an increasing number of solvent liquidations where we will assist the directors and their advisors to ensure the winding down is completed in the most cost-efficient manner.

If you require any advice or assistance on mediation or any other insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.