If a client has ceased trading
Check whether the client has closed the business or resigned as a director. Signpost to a specialist business adviser for advice on leaving or closing the business if that is needed. Has the client submitted an application for ‘striking off’ to Companies House – to apply to strike off a limited company, the client must send Companies House Form DS01. The form must be signed by a majority of the company’s directors.
They should deal with any of the company’s assets before applying – eg, close any bank accounts and transfer any domain names. Applications for ‘striking off’ can be refused and this is invariably due to debts due to outstanding creditors – eg, HMRC who can object to the application. Alternatively, the other way to close is through a formal liquidation process. This, however, can be expensive and cost up to £5,000 (with VAT) for a straightforward liquidation.
For insolvent companies, this is known as a creditors’ voluntary liquidation (CVL). The process can only be entered into under the guidance of a licensed insolvency practitioner. The client should always be referred to an insolvency practitioner in these cases, for further advice and guidance.
Ensure the client has checked whether they have given any personal guarantees for the limited company debts. If a personal guarantee relates to a complex business debt, such as an ongoing business lease, the client needs specialist advice.
Providing the client has no complex business debts that require specialist help, you can give the client full advice on their personal debts. Advisers could also seek the advice of an insolvency practitioner or the client’s accountant.