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.

HMRC – an involuntary creditor

In business, companies will enter into contracts or trade agreements with suppliers and customers by a matter of choice.  However, H M Revenue & Customs (“HMRC”) have no choice.  They are an involuntary creditor who must engage in tax compliance relationships.

The current business climate indicates cash flow remains one of the main threats to company survival and, at PBC, we hear claims that because HMRC are not providing that urgent supply or service required, payment of the taxes is not given any priority.  Given that HMRC have more (and expedient) powers of enforcement and recovery than most suppliers, this is wrong.

In two recent reported cases, HMRC:

  • Continued with their petition, notwithstanding the company in question had already entered into voluntary liquidation.  The company was wound up by the court on the basis intense investigations were needed surrounding tax evasion and, in the interests of creditors as a whole the compulsory liquidation was more justified than a voluntary liquidation.
  • Exercised their powers to have a company wound up in the public interest.  This was a company that promoted debt avoidance schemes and the court agreed the operation was detrimental to the taxpayer and the winding up made.

Certainly, at PBC we have noticed a significant uplift in enforcement activity by HMRC and PBC are administering the liquidations of several where there has been tax avoidance or evasion.  These cases can lead to personal liability against directors.

HMRC officers are currently more proactive, seeking to attach HMRC debt to company assets, which could ultimately result in that company being so disabled, it is forced to cease trading.  Generally, HMRC will give you a lot of warnings but, all too often, these warnings are ignored until that warning becomes an enforcement action.

As mentioned, HMRC are not “Trading” with a company.  They do not have that trading relationship but they do have a duty to maximise tax receipts.  Ignoring their threats is misconceived because HMRC will carry out those recovery threats if needed.  However, we find they are willing to being open and candid in a continuous dialogue with them which can often result in a manageable way forward.

If you are struggling with tax liabilities and need any advice or assistance, or 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 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.

What is a prohibited name?

“My company is failing but there remains a viable core business that I want to save.”  At PBC we are hearing this scenario on an increasingly regular basis

There are recovery options available to companies that are suffering from cashflow difficulties, such as a company voluntary arrangement.  Unfortunately, circumstances may dictate the only viable option is to acquire the business from the company and start afresh.  The most regularly used procedures for this are a pre-pack administration or simply acquiring the business from the appointed liquidator.  However, the overall circumstances dictate which is the more appropriate option in the circumstances.

A difficulty with looking to re-start trading with a new company can be the name and/or brand.  Section 216 Insolvency Act 1986 (“The Act”) states that the name of a company that is in an insolvent liquidation becomes a prohibited name.  Directors have suggested looking at a pre-pack administration avoids this restriction.  However, it is often the case an administration will exit into liquidation and accordingly, trigger Section 216 of the Act.

The provision relates to a name that is so similar that it may cause confusion to the public.  It also includes a trading name or a simple use of initials.  In the case of Re: Johnsons Electrical & Mechanical Services Limited (in liquidation) the court determined naming the acquiring company, “JEM (Group) Limited” was the re-use of a prohibited name, despite the director claiming “JEM” was part of his name – Jeremy.

There are exceptional rules to argue against the allegations of a breach to this provision and a director should always seek independent legal advice on the re-use of a prohibited name.  More importantly, directors should ensure the steps required are strictly followed because the courts adopt a no tolerance stance towards the failure to follow correct procedures.  As a warning, the penalty for getting this wrong has been demonstrated in the Johnson case where the director was held personally liable for the debts owed to the (2) claimant companies, resulting in his personal bankruptcy.

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.