The owner-managed business was principally engaged in providing hardware maintenance services for medium and larger organisations.
It was based in a serviced office in Bedford and did not have an overdraft facility in place, meaning it was reliant on its own cash flow for liquidity. In the early days, the company performed highly effectively.
One of the director’s colleagues passed on details of a contact from a large supermarket chain. After meetings, the company won an important contract to manage ongoing data and voice cabling maintenance in all UK stores, including Northern Ireland.
HMRC Penalties
Following this, the company was engaged as the preferred Wi-Fi supplier for a large phone company. The company was given further work handling Wi-Fi surveys and providing design, installation, and maintenance services.
Once preferred supplier status was gained, the company was on an upward trajectory and able to secure other work in overseeing wi-fi provision and service for large corporates. Business growth happened quickly and extra staff were taken on, with employee numbers increasing from three to 13 during the company’s peak.
But, while some aspects were going well, there were numerous shortcomings. The director was completely inexperienced in running a limited company and during the first year’s trading, failed to maintain the company’s records. This led to penalties from HMRC for VAT and PAYE arrears.
The company was generating enough income and so was able to pay for the services of a qualified accountant and she ensured records were brought up to date. However, all was not well as it was revealed that there were arrears owing to suppliers and HMRC. On top of this, there were several CCJs taken out against the company.
The Choice to Liquidate
A recovery plan was formulated, with suppliers contacted and payment plans agreed. This proved effective and the arrears were dealt with. HMRC was also contacted and a payment plan was also agreed.
Despite taking action and having work, the company found that paying the arrears was too much to bear – these totalled some £10,000 per month to clear debts and large new VAT liabilities were also being incurred each quarter.
It became impossible to manage the situation and the director requested advice from Company Debt, who put forward plans to stop trading and be placed into creditors’ voluntary liquidation.
