6th November 2017 Posted by - Alexander Accountancy
Are you a Director of a failing company?
This can be an exceptionally difficult subject to discuss and come to terms with. The process is painful in ways that those who have not been through it could struggle to understand. And it is very easy for the armchair experts to recommend all sorts of advice they know little about. However they are right on one thing, you should always get advice.
The first person you should speak with is your accountant, and any decent accountant will know there can be more than one way of dealing with a failing company. They will also have contacts within Insolvency, Rescue and Recovery that have the expertise to advise you on the correct course of action.
Please remember it is not advisable to continue trading whilst a company is insolvent without getting expert advice, you can lose the protection of limited liability, and you can become personally liable for some of the debts of the company. So it is always best to let the experts try and protect you.
One of the barriers to getting help for Directors of failing companies can be the cost, although the initial pre instruction opinions are usually free.
There is some little known financial help for Directors.
Under certain circumstances the Directors can be entitled to personal financial benefits that are not widely advertised, known about or used. This financial help can be available just when things seem to be at their worst and needed the most. Not necessarily a silver lining, but at least a little bit of relief from some of the pain.
Under the Workplace Pension rules for auto enrolment many Directors are claiming not to have contracts of employment so they can be exempt from enrolment. This is really poor advice and a bad course of action. If a Director accepts they are an employee but does not want to subscribe to the Workplace Pension, simply opt out. They have then established themselves as having a contract of employment. Why is this important? Because if a Director has a contract of employment, they have an entitlement to redundancy pay. If you have established yourself as an Office Holder and not an Employee, you have given away your rights to redundancy pay.
What does this really mean?
As the Director of a failing company with a Contract of Employment you may be entitled to many thousands of pounds of tax free Redundancy Pay. This can help with your personal financial responsibilities, reduce immediate pressures and even be helpful in rescuing your future.
Want to find out what can be done?
If you are unsure of what to do next Alexander Accountancy can offer advice and introduce you to contacts that can assess the full range of options before any action is taken. If you want us to advise you on this type of matter in full confidence please email da***@al*******************.uk or telephone Burton upon Trent 01283 743851.
