Insolvency - working as a contractro

syron

Hi,

I have a friend who is currently in UK bankruptcy. He plans to do the following, but I am frankly a bit worried. Thus, I am looking for some expert comments and advice.

His girlfriend registered a limited company in Germany to secure some work contracts from his/her old clients (mostly IT and software related work). He would be hired as a free contractor to fulfill those jobs. He would be paid considerably less than what the company charges the clients (e.g. he receives 1000 GBP and the company actually charges 5000GBP - the remainder would be used to pay a salary for his girlfriend, cover administrative expenses and build a reserve).
Is this in line with UK insolvency law? Or can he or even his girlfriend get into trouble for that?
Doing the same job for a different company he would probably earn more in the range of 2500-3000GBP.

Many thanks in advance for any help!

Cheers

National_Debtline

Hello there.

I can give you the information as regards the law in England and Wales, which is as follows:

It is an offence for an undischarged bankrupt to act as a director of, or directly or indirectly take part in or be concerned in the promotion, formation or management of a company, except with the leave of court.

The court to which a bankrupt must apply for leave to take part in the promotion, formation or management of a company must be the court by which he/she was adjudged bankrupt. The bankrupt’s application must be supported by a witness statement.

I'm less sure about the position in Germany, you may wish to give the Insolvency Service a call about this query.

Best wishes,

David @ NDL.

Action_Jackson

As long as he acts solely as a contractor and is not directly involved in the running of the company as already mentioned, then he should be fine. That's for a UK company at least - I'm not even sure if there are any rules that stop him being invloved outside of the UK.

What he charges the company is entirely at his discretion. A Limited Co. making a fat profit off a contractor's work is hardly unusual. I presume his low pay will be to avoid an IPA for the BR year.

The rules are quite clear, and as long as they are not being broken, there is nothing the OR can do about it. The fact that some might regard this as pulling a fast one is irrelevant, as it is not illegal - more like well thought out.