Closing LTD company

simpywimpy

After my son's company went belly up he was advised to remove himself as director which he did. This was last October. There were debts within the company but no assets to pay and we informed everyone accordingly.

Fast forward to this weekend and we receive a letter from the council regarding 14k business rates (they previously gave us a £300 repayment as we had overpaid). They have also blocked the company being struck off with companies house.

The council have addressed the letter to my son, and his ex company and threatened bailiffs action to his home address for the amount.

Any ideas where he stands?

earthstorm

simpywimpy wrote: »

After my son's company went belly up he was advised to remove himself as director which he did. This was last October. There were debts within the company but no assets to pay and we informed everyone accordingly.

Fast forward to this weekend and we receive a letter from the council regarding 14k business rates (they previously gave us a £300 repayment as we had overpaid). They have also blocked the company being struck off with companies house.

The council have addressed the letter to my son, and his ex company and threatened bailiffs action to his home address for the amount.

Any ideas where he stands?

I assume he will have a letter/certificate from Companies house saying to ltd company is wound up.

Was he the only director/shareholder?

Did he remove himself as director before the winding up notice?

If he was a director he would have been issued with 1 single share (value normally £1). this would be his full liability

pooch

simpywimpy wrote: »

After my son's company went belly up he was advised to remove himself as director which he did. This was last October. There were debts within the company but no assets to pay and we informed everyone accordingly.

Fast forward to this weekend and we receive a letter from the council regarding 14k business rates (they previously gave us a £300 repayment as we had overpaid). They have also blocked the company being struck off with companies house.

The council have addressed the letter to my son, and his ex company and threatened bailiffs action to his home address for the amount.

Any ideas where he stands?

I would urge you to get your son to seek independent legal advice ... and not from whoever suggested he resign as director

You see, your post suggests to me he was the sole/last remaining director of the company (else why would the council be contacting him). A company must always have at least one director.

Now your post also suggests the council think your son was involved in some form of wrongful trading.

Wrongful trading is the act by a director of a period of trading in which debts and liabilities are incurred, whilst having no reasonable prospect of a company avoiding insolvent liquidation.

Sound familiar?

Well if he is accused (and convicted) by a liquidator of wrongful trading then as director he could be personally liable for the damage the company suffered during a period of wrongful trading, hence the council's threats.

Brassedoff

simpywimpy wrote: »

After my son's company went belly up he was advised to remove himself as director which he did. This was last October. There were debts within the company but no assets to pay and we informed everyone accordingly.

Fast forward to this weekend and we receive a letter from the council regarding 14k business rates (they previously gave us a £300 repayment as we had overpaid). They have also blocked the company being struck off with companies house.

The council have addressed the letter to my son, and his ex company and threatened bailiffs action to his home address for the amount.

Any ideas where he stands?

You say it went belly up. In which way?

Wound up in court
Would up by shareholders?
Just left to fester after not being able to continue trading, hoping that if left for a year Companies House would strike it off?

Your description suggests that what he did. I have seen this dozens of times. A firm runs up debts, a director foolishly believes they can remove themselves of any obligation by resigning, then hope the company get's struck off.

If you can clarify, I can tell you what will happen next. I have just finished with a client who did the same thing. I can tell you what will happen and where this will go, especially with the OR.

I suggest your son or yourself urgently reads the 2006 revision of the Companies Act. Its important.

simpywimpy

The company originally had two directors holding 50% each share. Started in 2004. It went bust. We were advised to remove ourselves as directors and issue notices that we were insolvent and that there were no assets.

As the annual returns were overdue, companies house were in the process of striking off the company and there was no monies available to make the company insolvent.

!st director removed himself in August I believe and my son was removed in October. Meanwhile the council (we presume) have blocked the striking off of the company.

There were no major debts. We were under the impression that the council were all up to date with business rates as when we contacted them to say we were coming out of the leased property, they then sent us a cheque for an overpayment.

I presume the 14k is for just over a years business rates but this is after we went bust and came out of the building. Maybe the remaining lease time?

Pennywise

simpywimpy wrote: »

I presume the 14k is for just over a years business rates but this is after we went bust and came out of the building. Maybe the remaining lease time?

Why "presume"? There'll be a bill from the council somewhere saying exactly why they think that amount is owed. Has your son actually told the council that the property had been vacated? Clearly the Council think his company still occupies it. Was the council tax in the company's name or your son's personal name? A quick phone call and/or letter to the council may well make all this go away if their records aren't accurate!

If the previous bills are in the company's name, then your son has no direct liability to the council and they have no legal powers to visit his home to take his personal belongings. If your son acted dishonestly, negligently or fraudulently as a director, then he may have personal liability, but it will take the official receiver to take action against him - suppliers/creditors can't take direct action themselves, they have to appoint a receiver to recover monies from which to pay them.

Brassedoff

simpywimpy wrote: »

The company originally had two directors holding 50% each share. Started in 2004. It went bust. We were advised to remove ourselves as directors and issue notices that we were insolvent and that there were no assets.

As the annual returns were overdue, companies house were in the process of striking off the company and there was no monies available to make the company insolvent.

!st director removed himself in August I believe and my son was removed in October. Meanwhile the council (we presume) have blocked the striking off of the company.

There were no major debts. We were under the impression that the council were all up to date with business rates as when we contacted them to say we were coming out of the leased property, they then sent us a cheque for an overpayment.

I presume the 14k is for just over a years business rates but this is after we went bust and came out of the building. Maybe the remaining lease time?

Sorry, the company did not go "bust". You are confusing the situation with a company that is insolvent, ceasing trading and issuing a notice to creditors in the hope that one of them will pay the expense of liquidating the asset instead of the directors putting their hand in their pockets.

Here's a tip, go to http://wck2.companieshouse.gov.uk//wcframe?name=accessCompanyInfo , put the name of your Son's company in and you will see it's position when you click the number on the left.

I will bet you £10 it says "Status: Active - Proposal to Strike off ".

As I said, there is a whole process that your Son will now go through via the Official Receiver. He can expect a charging order at least now, if less of an asset, then personal Bankruptcy followed by an appearance in Crown Court.

Am I painting a bad picture, yes, on what basis? Experience 9 months ago with a former client.

Do the check and come back with what Companies House says. From their you will get a better set of advice.

simpywimpy

You are right Brassedoff, that is exactly what it says. We did have a business advisor with the enterprise trust locally whose advice we followed re resigning as director and sending out the letters just as you described.

Because he was last to take his name off (Oct I believe rather than August when other director managed to do it) does this make him liable on his own to sort this or are they both liable equally? Not heard from other director since but know where his new business is located. My son is disabled with no assets, very little income but decidedly worried about this.

I did phone companies house on his behalf to find out why the company was still active and they were unable to tell me who had disagreed with it because we are no longer officers of the company so a little bit catch 22.

I can assure you we followed the business advisors advice at the time and presumed it was all sorted. We are not the sort to deliberately try and defraud someone.

Brassedoff

PM me with details and I will run through what will happen and what you need to do to help your Son.

toddle2u

As I said, there is a whole process that your Son will now go through via the Official Receiver. He can expect a charging order at least now, if less of an asset, then personal Bankruptcy followed by an appearance in Crown Court.

How can you categorically say this will happen without knowing the full facts of the case? I would appear that your Client was guilty of wrongful trading whereas in this instance you have no idea what happebned or even if the money is actually owed to the local council. You advice is ill advised and nothing more than scare mongering without the full facts. What happened to your client is extremely rare and not the norm. The actions taken by the OP fulfilled his fidiciary duty and on the only thing he did wrong was resign on the advice of another so called professional who had probably been on a weekend mentoring course and think they know what they are talking about!

Mistral001

The main issue here is the Rates as far as I can see. Are they due or have the Council made a mistake?

If the OP's son does not get clarification from the Council, he needs proper professional advice on business rates I should think. Perhaps a chartered surveyor who specialises in commercial property or a solicitor who specialises in same.