Overview
Importing and selling seasonal goods and gifts, our client was formed in 2014, and had enjoyed some success with their wholesale sales model. They had grown to a good size and employed just under 30 members of staff.
They were able to buy in large amounts of stock in anticipation for different seasons throughout the year. This ability to look ahead to what customers wanted at certain times of the year had served them well.
The challenge
In preparation for the coming seasons, the company had purchased almost £2m worth of hot tubs and Christmas stock. Unfortunately for them though, the unexpected war in Ukraine sent utility bills through the roof, meaning hot tub sales fell through the floor.
Poor Christmas sales, possibly owing to families feeling the pinch as well, only served to make things worse. The large order had overexposed our client, and they found themselves struggling with their cashflow.
The client had accrued a debt of £1.2m with HMRC and had attempted to negotiate a payment plan with them. The Time to Pay arrangement they agreed on, however, was impossible for them to keep to. As a result, they had defaulted on their payments, and HMRC were due to take action against them.
How we helped
Initially, the client had come to us to ask for help renegotiating the Time to Pay arrangement to make the payments more manageable. We soon found out though, that HMRC’s recovery actions had progressed too far already. Within days, one of their field agents was due to visit the trading premises in order to secure their position against our client’s assets.
We acted swiftly to ringfence the client’s assets by moving forward with an administration process instead. This not only protected the assets, but also the company from any legal action while it was in administration.
By buying back its assets via a pre pack during administration, our client was able to close the company and trade as another business, saving almost thirty jobs in the process. The client is now able to focus on growing the company back to the levels it was previously operating at and has realised the dangers of overexposure to one particular risk.
Talk to us before trouble hits
We’ve helped countless businesses negotiate manageable Time-to-Pay arrangements with HMRC. See if your business might qualify for one here. If you find yourself owing HMRC an amount that your company will struggle to pay, give us a call as soon as you can to see how we can help.
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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