Overview
Our client, an IT consultant, operated as a limited company in order to satisfy the needs of their main contractor. Established back in 2012, the owner had enjoyed some success as the only employee within the company, which boasted an average annual turnover of £85K.
The challenge
The limited company status that had allowed our client to perform services for their main client for so many years, suddenly became an issue. New IR35 legislation meant that our client was now seen as an employee rather than contractor, causing the contract with their main client to be terminated.
Unfortunately for our client, this contract loss coincided with a significant downturn in work owing to the COVID-19 pandemic too. With their main client gone, and other work being scarce during lockdown, our client’s company found their cash reserves dwindle quickly after expenses and wages had been paid.
Our client eventually had to take up full-time employment elsewhere, but couldn’t close the limited company as it now owed £15,000 to HMRC and other creditors. Understandably, they found themselves under substantial stress, and saw their mental health deteriorate while the situation remained unsolved.
How we helped
The client was keen to close their IT consultancy company, and after hearing of the problem, we agreed that this was the right and obvious thing to do. Our first course of action was to relieve the pressure on our client by becoming the main point of contract for their company’s creditors. This meant that any invoices or demands came to us rather than the beleaguered director.
Our excellent working relationship with HMRC meant that we were able to liaise with them on a daily basis to keep them informed of the struggling company’s position. Alongside this, we quickly set to officially closing the company by processing the relevant application paperwork for closure.
We communicated with all creditors and other associated parties to explain the situation and give them ample notice of the impending closure. Each was kept in the loop with regular updates along the way.
The result
We were able to close the company promptly and efficiently, making sure that all issues were resolved to prevent any hidden problems arising in the future. This was achieved with the consent of all creditors involved, and all of the company’s debts addressed.
The substantial stress experienced by the director started to ease as soon as we were instructed to assist with the closure, with all concerns entirely settled by the time we were able to close the business.
Our client has since been able to look to the future without fear of crippling debt, and is enjoying their new employed position.
Talk to us before things get too hard
We’ve helped countless businesses to assess their options when it can seem as if all might be lost. By calling for FREE, no-obligation advice from one of our friendly specialists, you’ll be given all the guidance you need for the best route to take your business. While we can steer troubled companies back to profitability, we also help to navigate tricky business closures if that’s the best option for you.
As business rescue specialists, we can help you to discover the best possible solution to any issues your company might be having. Call us on 0800 975 0380, or email [email protected] for a free consultation.
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