Directors Responsibility & Advice
“important to know your responsibilities as a director”
It is essential as a director of a business you understand your responsibilities and seek assistance as soon as possible.
The first step is realising your business is insolvent, usually associated in the period of time where there cash flow difficulties and you are unable to pay suppliers, HMRC, utilities, or even staff on time. Worse still is if CCJ’s have been taken out against the business, or Winding Up Order, or HMRC Demand to pay.
If any of these echo your own issues then you need to make professional help from an insolvency expert.
I can’t afford to pay my suppliers
I can’t afford to pay my business rates
Arrears with HMRC and received a Statutory Demand Order
What is a Time To Pay Agreement with HMRC?
I have received a Winding Up Order, what can I do?
What happens if I liquidate my company?
Would staff receive redundancy pay?
I am worried about my directors loan account
A director has a legal duty to put the interest of the business creditors first, and whilst a limited company offers protection from personal liability, this does not dissolve the directors responsibilities at a difficult time and there are a lot of pressures.
A court or insolvency practitioner may go back up to three years through transactions for the company. Such responsibilities include:
Prevent fraudulent trading e.g. taking credit when knowing the debt cannot be paid
Accepting monies for goods or services that cannot be fulfilled
Maintain adequate bookkeeping records
Preferential treatment of creditors
Not to withdraw funds for non business activities
Undervalued sale of company assets
In some cases such as failure of any of the above or having an overdrawn directors loan account or guarantees as a director you can be held personally responsible. An overdrawn directors loan account will be treated as an asset of the company and will have to be repaid.
Seeking the right advice is always essential and should be done as soon as you become concerned about the possibility of insolvency. There are many cases where good advice can be a saviour to your issues. Our wealth of experience have helped companies out of an insolvent position by forward planning which could involve restructuring, stock levels, staffing levels, raising finance amongst many options to be considered. There is also administration with agreement with creditors to allow you to trade out of the difficulties.
Time is always of the essence and seeking professional advice as soon as possible is a must.
There is perhaps some good news if a business has to be liquidated in that the liquidator will carry out all the contact to creditors, organising payment of staff, dealings with HMRC etc. effectively taking it all off your shoulders.