Any advice please?

Roebuck_2

Hello ladies and gents,

I am new here but have been lurking for months.

I really need some advice please...I am one half of a two man partnership. We have no written agreement and just 'fell' into the business several years ago as almost a hobby thing. We had hardly any business 'nouse' at all, but built things up to £600k turnover per annum up until a couple of years ago when we experienced a massive downturn in trade.

Long story short, we now owe around £20k to HMRC VAT and 14k in unpaid business rates. So, we really need to find around £17k each to settle the debts.

I can raise my half, just about, but my partner is refusing to accept any responsibility and will not do anything to raise funds for his half. I know we are jointly and severally liable, but he has now disappeared and will not discuss things any further. I really feel that I will be forced to declare personal bankruptcy, otherwise, he may do first. I cannot afford to repay all the debt in full but am happy to pay my half if he does the same.

I do have equity in my jointly owned house and would really like to avoid BR if at all possible.

Any advice would be gratefully appreciated. Thank you.

Mouse1812

Is the partnership a true partnership? are both your names personally on the bank statements and VAT registration?

Did your accountant recommend that you should be operating as a limited liability company?

Roebuck_2

Hi Mouse,

Just checked...the business account paper statement has just my name and the business name on it. When logging onto the online business account, it just shows his name. Audit trail would show both of us as signatories on the business account though.

VAT just shows the business name, but I assume way back in time we would have submitted both partners names during registration.

Account never recommended trading as LLP and we have now passed that point as debt was run up over the last couple of years.

Mouse1812

OK, partnership it is.

Now while you might think "we have passed that point" I would be asking why didn't your accountant advise you about limited liability? Basic stuff these days.

debtinfo

unfortunatly though as you have already realised you will be liable for the whole amount unfair as that may be. Therefore you really need to start thinking about the debt as fully yours rather than just your half again as unfair as that is. All you can really do now is to try and cut a deal with the creditors, to either pay a lower amount in settlement of to pay a chunk up front in return for time to pay back the rest in installments

Roebuck_2

So, in essence, if I go bang personally, say in the next week or two, that would then make HIM liable for the whole amount?

debtinfo

It would, but that wouldnt change your situation

debtinfo

Just to qualify myself, he would be liable to the extent that your bankruptcy does not pay all the debts, so if they get fully repaid out of your assets then no he wouldnt be liable anymore as the debt would have been repaid, but if there was nothing repaid from your bankruptcy he would remain liable

Mouse1812

Which is why I would be furious to discover that my accountant had failed to provide appropriate and timely advice to protect me, my family and my assets from the business risk of being in a partnership. I’d call that professional negligence.

Roebuck_2

Thanks debtinfo,

He really is being very arsey about this and I think I have no choice but BR. HMRC and rates have not yet issued legal threats, but surely this will only be a matter of time...

My partner has no intention of either paying or declaring BR. Might I be better to just sit and wait for these two creditors to force BR on both of us...that way he doesn't get away scott free, so to speak?

I do have more equity in my house than him, but not enough to cover the whole debt.

I have sole control of PDQ machine, Paypal virtual terminal, etc and ceased trading last week. In other words, should he be able to take orders, he has no actual way to process cards at this stage, thus preventing the VAT bill increasing further. You advice is much appreciated by the way!

Roebuck_2

Hi Mouse,

We did change accountants some two years ago and neither the original one or the new one advised us to go LLP. We have also fallen out with our current accountant to to monies being owed to him! Jeez...I have been a fool!