Directors Redundancy

Asanovic10

The company my wife and own has gone into liquidation. Can we claim redundancy and can this claim include our dividends as well as our wage?

inmypocketnottheirs

I don't think that's quite how it works.

What liabilities does your business have?

davec1960

Was the company registered with HMRC for PAYE?

If not then your claim will fall alongside other creditors of the business. Some of the wages may have prefered creditor status. This will only be of use if there is anything to distribute after the liquidator has been paid his fees and expenses.

If it was then you will need an RP1 form, the liquidator usually deals with these and forwards them to the Insolvency Service (IS)

The IS will pay redundancy pay, unpaid wages, notice and holiday pay due up to a maximum of £450 per week, anything above £450 becomes a claim on the failed company. There is a limit on the number of weeks of unpaid wages, 6 or 8 from memory. You will need to provide a copy of your contract of employment with the company as part of the evidence for your claim.

Dont expect the IS to act quickly, I had a company fail, the employees were paid in 6-8 weeks, my payment took a further two months and a lot of chasing.

You won't be able to claim for dividends declared but not yet withdrawn from the company from the IS. These are another to add to your claim from the company.

One thing to be aware of is that if you have been taking dividends the liquidator may want proof that the company was profitable or had distributable reserves at the time the dividend was declared.
Should you not be able to show this then he may take action to recover them from you.

The above comments are based on my experience of being involved in the purchase of a business in administration and putting a business into administration.