January Newsletter

Are HMRC winding up The Iron?

It has been widely reported that Scunthorpe United Football Club are facing uncertain times after being served a winding up petition from HMRC over an unpaid tax bill.

One of the consequences of issuing a winding up petition are that any dispositions of property are void unless ordered by the court. This includes payments from Scunthorpe United’s bank account.

If you have any clients who are continuing to trade with Scunthorpe United, please advise them accordingly. If Scunthorpe United are wound up and placed into compulsory liquidation, then the subsequently appointed liquidator will look to claw back any payments which your clients have received after the winding up petition was issued.

The Insolvency Service  – no longer the leading “burial with no questions asked IP firm” in the UK

The Insolvency Service performs a number of different roles within the world of insolvency.  One such role is to act as liquidator in compulsory liquidations following the making of a winding up order.  Whereas in days gone by, it might have been thought that due to the inherent inefficiencies of the public sector, The Insolvency Service might not carry out a full and detailed investigation into the affairs of an insolvent company that was been wound up by the court, such that misdemeanours by directors might well go unnoticed, we have it on very good authority that those days, at least for the moment, are over.  No doubt for, in part, political reasons to do with the fallout from the Covid – 19 support schemes,  The Insolvency Service is taking a much more active approach in investigating and pursuing directors of companies which have been wound up compulsorily.  All the more reason for directors with the help of their accountants and insolvency practitioners to address those “skeletons in the cupboard” voluntarily before a creditor, usually HMRC, issues a winding up petition against a client company. 

Bounce Back Loans – directors are being pursued….

A well-known litigation funder, Manolete, has teamed up with Barclays Bank to investigate and pursue those business owners who are suspected of having abused Bounce Back Loans (“BBL”).

There are many companies which have taken out BBLs and have ceased to trade and have not entered into formal insolvency proceedings. There are a number of cases were the business owners have misappropriated the BBL such as transferring the funds out to personal bank accounts shortly after the funds were received by the company.

The litigation funder will pursue the claims outside of any formal insolvency proceedings by taking an assignment of the claims and divide the recoveries with Barclays after costs.

The number of cases which have been pursued using litigation funding is still relatively small but the litigation funder has advised that recovery rates have been high and most claims have been settled within five months.

Another month of soaring stats – December 2022

The number of registered company insolvencies in December 2022 was 1,964 which was 32% higher than in the same month in the previous year (1,489 in December 2021), and 76% higher than the number registered three years previously (pre-pandemic; 1,119 in December 2019).

Comments are closed.