Unpaid invoices – a risk of liquidation?

How much time and effort does your company have to spend chasing unpaid invoices?  According to Government figures, on average business owners waste 86 hours per annum chasing invoices.  That equates to 133 million hours of employment across UK businesses.

According to Government figures late payments amount to an estimated £26 billion (an average of £17,000 per business) and cost the UK economy £11 billion each year, leading to the closure of 38 businesses every day.

The key reasons for late payments include:

  • Cash flow difficulties experienced by your customer.
  • Disputes regarding supply and/or invoice value.
  • Contractual disputes, particularly in “Measured” work such as in construction

On 31 July 2025, the Government launched a consultation on late payments.  This consultation expired on 23 October 2025 and the outcome was published on 24 March 2026.  Over 850 formal responses were received from businesses across the spectrum and trade bodies – more than ever before on consultations on this topic.

The headline steps the Government are looking to legislate include:

  1. A 60-day “Hard cap” on payment terms is to apply to large businesses who purchase from smaller parties.
  • Mandatory interest shall be payable at the rate of 8% across all commercial contracts.  Large companies will be required to report how much late payment interest they owe and have already paid in the financial year, which could trigger an investigation by the Small Business Commissioner.
  • Providing the Small Business Commissioner with extended powers.
  • A statutory deadline for disputing invoices.  It is currently envisaged this will be a 30-day limitation period.
  • A ban on retentions within the construction industry.  This area is open to further consultation but it is recognised some large companies exploit retentions to the financial detriment of smaller businesses.

The usual, “When Parliamentary time allows,” caveat means there is no indication of timing for the implementation of these measures.  In the meantime, businesses need to maintain good credit control procedures and are being encouraged to review their existing terms and conditions, specifically surrounding payment terms and consider how the above proposed amendments could be applied

If unpaid invoices are affecting your business and you need any advice, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Directors – are your redundancy entitlements protected?

Are you a director and shareholder of a company?  As part of holding office were you advised to take a minimum salary with the remainder of your remuneration package by way of dividends?

The above is a common practice and represents sound advice on your pay structure.  However, that is fine where a company is profitable and under no threat of the need to enter into any insolvency process.

When a company ceases to trade following administration or liquidation employees are entitled to claim against the Redundancy Payments Services (“RPS”) for their unpaid entitlements, including wage/holiday arrears and redundancy.  However, the RPS take an active role in rejecting claims submitted by directors, where they can.  Their argument being the director is not an employee within the meaning of the Employment Rights Act 1996.

In a recent case we have seen at PBC, the director appealed against the RPS rejection by way of an employment tribunal claim.  In response, the RPS sought to justify their rejection on grounds including:

  1. The contract of employment provided for a salary under the national minimum wage and accordingly, was unenforceable.
  • The director was engaged in a contract for service, not a contract of service.  In other words, the director was a form of contractor rather than an employee.
  • The director was able to control their own destiny and were not subject to or subordinate to anybody else. 

Starting with the last point, we believe the RPS is incorrect as all directors owe statutory duties to their company and its stakeholders.  These duties (as confirmed by the Supreme Court) shall prevail at all times over any personal views or difficulties.

In principle, all directors must ensure they can be satisfied they are an employee of the company.  With that in mind, all directors should ensure they have a written contract of employment.  You may need independent advice, but you must ensure that contract is enforceable by law, meaning it does not act in contravention of statute such as being below the national minimum wage.

If you need any advice or assistance on any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Early advice is the best advice

At PBC we regularly hear directors express their fear of being disqualified, held liable for wrongful trading or even believing they may face going to prison!  Admittedly, they are the most serious cases where these events happen, but it remains a minority when considered against overall insolvency numbers. 

Advisors and other businesspeople, alike, often ask us what are the current trends that cause a company to experience difficulties.  Over the past 18 months, or so, insolvency practitioners across the country have seen some general patterns, including:

  • Cashflow difficulties, resulting from cancelled orders to enhanced employment rights, material and other general operational costs increasing.
  • An increase in HMRC enforcement activity.
  • Directors taking drawings as opposed to salary, creating an adverse director loan.
  • Company assets are disposed of or transferred away, often at an undervalue or in the hope of putting them beyond the reach of creditors.

The PBC Team acknowledge that first call to seek guidance can be very difficult.  We appreciate that difficulty and respect every director who takes that first step.  Many directors have expressed their gratitude after having made the initial call and listened to the options available to them.

What experience has shown is:

  1. Leaving things until the “11th hour, or beyond,” reduces options available, creates a hostile environment with creditor enforcement actions commencing and, invariably, you find the director has unwittingly breached their duties by disposing of assets in an inappropriate manner.
  • Taking early advice opens up more options for the directors to consider, generally with a degree of control and minimises the potential exposure for directors.

If you need any advice or assistance on any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Achieving payment in full

Recently, PBC took on a compulsory liquidation where there were no known assets, other than an adverse director loan and that director now lives in Dubai.

After enquiries were made into the company finances, we wrote to the director and explained how much was payable, having taken account of his employment rights and other sums he was owed.  The director was offered the opportunity to repay the loan immediately or payable over time, although the latter option would include costs and interest charges.  No threats, just a civil communication.

That civil, open and honest communication ultimately led to the director fully repaying the loan account amounting to over £400,000, which has resulted in PBC now preparing to pay all known liabilities in full, together with statutory interest.

This excellent result further demonstrates the experience at PBC where a civilised and transparent dialogue with the director concerned resulted in the perfect outcome for all.

If you need any advice or assistance on any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Members’ Voluntary Liquidations – Countdown to 5 April 2026 and a 4% Tax Saving

The rate of CGT that applies to Business Asset Disposal Relief on the lifetime allowance of £1Million is currently 14% until 5 April 2026.  After this date it will rise to 18%.

The above could be a significant tax saving for you or your clients and, if this is being considered, the time to start acting and planning is now.

Should you wish to discuss a Members’ Voluntary Liquidation further then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk.

Early bird catches the worm!

When a company or an individual is experiencing financial difficulties, it is vitally important that early advice is sought from trusted advisors which, generally,  improves the potential outcome for all concerned.  At PBC Business Recovery & Insolvency this is something we advocate all the time and below is a recent testimonial from a director where he has taken advice sooner rather than later….

“I have been meaning to drop you a line since we met up to say many thanks for your time and sage advice regarding my options to keep cashflow running and stave off the need to investigate any other more drastic solutions at this stage. I have managed to put a payment plan in place for the VAT as suggested, alongside the corporation tax plan already in place, so this has enabled me to cover the redundancy costs for a couple of positions, with the ongoing savings that this will provide hopefully being sufficient to see us through to a more buoyant trading environment. As you said when we met, hopefully this will mean we don’t need to meet again any time soon in a professional capacity (in the nicest possible way!) but I will certainly let you know how we get on at the other side of all this in any event. Have a good weekend and thanks once again”

If you need any advice or assistance with any financial concerns, PBC are here to help and the sooner advice is sought the more options that are available, which can include no formal instruction to us. Please contact us on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Collaborating for Success

PBC Business Recovery & Insolvency are dealing with the Administration of the UK subsidiary of a very well-known coach company that was based in Belgium.  Apart from the usual office furniture and equipment, together with plant and machinery, the company owned its freehold trade premises.

The chattels all sold for the higher end of valuations, but the highlight was the premises.  Agents had valued the premises with instructions to give serious consideration to offers in excess of the minimum expectation. As a result of a short marketing campaign, the agents received several offers but rather than simply accept the highest offer, the interested parties were placed on notice to submit their best and final bid.  The result was the property was sold for nearly twice as much as expected.  This will mean a return will be paid to unsecured creditors, more than double what was originally envisaged.

You cannot substitute experience, and the outcome of this property sale was the result of the vast experience at PBC, working alongside Wilson Browne Solicitors and Lambert Smith Hampton, who should be recognised for their part in this success. 

If you need any advice or assistance on any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Former liquidator imprisoned

Many readers may take some pleasure at reading the headline, which relates to an Australian Insolvency Practitioner (“IP”) who was found guilty of extracting over AUS$2.5 million from insolvency estates.

Whilst that IP will have plenty of time to reflect on his wrongdoing, the estates should not lose out as a regulated IP must take out a specific insurance bond, to the value of the anticipated assets in that estate, on every appointment.  This serves to protect the creditors from any financial wrongdoing by the IP or their staff.

Unfortunately, there are unregulated advisors who prey on the vulnerable making big assurances such “Use us and we help all of your financial worries go away”.  They will offer you something like:

  • You can resign as a director.
  • We shall acquire the shares.
  • Everything will be sorted, meaning you can get on with your life.

PBC have previously advised directors of the dangers of trying to “Cut corners” and use an unregulated advisor, yet those warnings do occasionally go unheeded at considerable personal risk to the directors.

On 29 July 2024 Save Consultants Limited was subject to a public interest winding up order.  This company worked alongside Davis Acquisitions Limited who were appointed as director of 78 companies.  The Insolvency Service stated Davis Acquisitions was used as the vehicle to, “Avoid formal insolvency procedures, asset recovery and director conduct scrutiny.”

Unlike the situation with the wayward Australian IP, these companies are not subject to the specific insurance requirements and, as such, the creditors will suffer greater loss.  However, the likely issue surrounding those 78 companies will be a formal winding up of each company, followed by commencement of legal proceedings for a breach of duties, which could lead to personal liability and even director disqualification for those directors who believed using an unregulated advisor was the “Easy” way to out.

Financial difficulties can often be an unpleasant and stressful experience for anyone, so it can be attractive to hear someone promising to take all of your problems away.  However, as the saying goes, “If it sounds too good to be true then it often is,” could not be closer to the truth when discussing the highly specialised area of insolvency, where, to avoid any repercussions, demands appropriate and regulated specialist advice.

If you need any advice or assistance on any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Insolvency as a job – It can be a thankless task.

Everyone wants a pop at someone and that someone ends up being us at times. 

  • Landlords losing a tenant or with rent arrears
  • Creditors being owed money
  • Director/shareholder disputes
  • Employees losing their jobs

We’ve had creditors turn up with big burly men and threatening behaviour, verbal and written insults. Every man and his dog thinks that because a company has gone bust there must have been some wrong-doing which we absolutely must investigate. Albeit that is very rarely the case, in the few instances we do have to take legal action and lift the corporate veil, we then hear ‘you didn’t tell us that’ or something else, quite often insulting the person having given the advice. 

If we know about it, we will tell you if it’s right or wrong.  Even if there is an action, we report it to the Insolvency Service, but it rarely results in director disqualification.  We can only pursue someone financially if they have anything to pursue and if it’s cost effective.  However, if we don’t do so, that’s our fault too, even though we are an independent 3rd party who was not involved whatsoever in running that business.   Often, we are accused of being in cahoots with the directors, just because they came to us for advice and we are helping them with their statutory duties, along with relieving them of some pressure at the same time. 

We work in a very complex profession whereby the ‘entity’ we are acting for changes throughout, initially advising directors or individuals of their responsibilities and guiding them through the process before being formally appointed and then having a statutory duty to act for the creditors.  Despite all of these,  we remain in insolvency because we believe there is a value in what we do. 

The insolvency process is beneficial although it’s a hard sell at a networking event, we can’t often offer much in return but may help you keep a client, ensure employees get paid, release directors from a lease enabling the premises be let to a more reliable business, put some money back into the public purse, return funds to unsecured creditors in quite a few occasions, relieve some pressure from business owners that simply need guidance so they don’t fall fowl and become one of those few above that do become personally liable. 

We often provide enough support that our formal services are not needed.

Who knows – you may actually see the positives in what we can offer….. 

By Claire Goodacre 

If you need any advice or assistance on any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Settling a Director Loan Account – A potential tax exposure?

Settling a Director Loan Account - Potential Tax Exposure?

It has become an increasing situation to discover adverse director loan accounts (”DLA”) showing on the balance sheet of companies that are in financial difficulties.  All too often a director is left with a financial burden that requires settlement, whether that is in part or in full, paid by way of lump sum or over a period of time. 

Where it is part settlement, is the unpaid balance of that DLA deemed to have been written off or are you simply released from that liability?

That was the question the tribunal judge had to consider in the First Tier Tribunal of The Commissioners for his Majesty’s Revenue and Customs versus Gary Quillan.  The issue arose after Mr Quillan paid £57,000 to the liquidator of his company, leaving an unpaid balance of £382,456.  HMRC decided to levy a tax charge against Mr Quillan under section 415 Income Tax (Trading and Other Income) Act 2005 that permits the assessment against any adverse DLA which is either written off or released (from being pursued).  HMRC lost the appeal as the tribunal determined the DLA balance had not been written off nor released, merely left unpaid and available to pursue should the financial circumstances of Mr Quillan significantly improve at some later time in life, subject to the provisions of the Limitations Act.

Where an adverse DLA is concerned, if a director is incapable of repaying in full, paying a settlement in full and final satisfaction, it may expose that director to a section 415 tax assessment.  But, in leaving the matter “Open” the risk carried is they could be subsequently pursued for the unpaid element at some later stage, presumably within the 6 years limitation period?

When faced with a company that has an adverse DLA, PBC look to work with the director to review the construction of the DLA to ensure the balance is a genuine personal liability.  All too often we find the DLA includes genuine business expenses and often makes no allowance for setting off monies owed to that director.  Indeed, in a recent instruction, PBC were able to successfully defeat a DLA recovery claim by litigation funders (acting for a liquidator) by exercising a similar review.  Unlike that recent instruction, while a review may not extinguish the balance owed, it can often assist the director in reaching an agreement for repayment and in a manner that could minimise the threat of a tax assessment landing on the doorstep at a later date.

If you need any advice or assistance on any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.