Some myths about Voluntary Liquidation
As with anything of this nature, there are a lot of myths surrounding Voluntary Liquidation. Some bloke down the pub had a friend who had a friend whose dog once heard that…. You know the story.
To clear up a few of the more prevalent myths.
MYTH: VAT & Inland Revenue can pursue you personally for money your company owed.
TRUTH:Any corporation tax or VAT owed, is owed by the company. The company is a separate legal entity to the Directors, and so the Directors are not personally liable.
MYTH: VAT & Inland Revenue are preferential creditors.
TRUTH:VAT and HMRC have not been preferential creditors for a numbers of years now. The only creditors to have any preferential treatment are employees – they can even claim statuary redundancy if the company cannot afford to pay them.
MYTH: You can’t go back into business.
TRUTH:The way the law sees it, if the Director is no fault for the company’s failing, and has acted appropriately (not broken any laws) then Liquidation does not mean they can’t go back into Liquidation. There are some very famous Directors who have been involved with companies that have Liquidated. Watch TV and see if you can guess who.
MYTH: You have to make yourself bankrupt.
TRUTH:This goes back to you and the company being separate legal entities. Just because the company fails, doesn’t mean you have to fail as well. In most cases you can just get on with your life without any issues.
MYTH: Your creditors can pursue you for any shortfall in their debt.
TRUTH:Your creditors will receive a dividend payout proportionate to their debt, but that’s all they will receive (unless you have personally guaranteed the debt). They are not due any more payments, indeed to overpay them would be seen as preference, and so breaking the rules.
MYTH: It effects your personal credit record.
TRUTH:The activities of your company are not tied in with your personal credit record. Again you are a separate legal entity to the company and so not personally responsible for it’s debt.
MYTH: You have to sell your house.
TRUTH:OK let’s get this clear, you are not responsible for the companies debts (provided there are no valid guarantees in place). Once the company is Liquidated, the balance of the debts are written off.
MYTH: You will be blacklisted for Liquidation.
TRUTH:There is no official blacklist of Directors who have Liquidated company’s. It will show on your Companies House record that you have Liquidated a company, but this isn’t the same as being blacklisted, it doesn’t prevent you from going into business or taking out credit.
MYTH: You are exploiting a loophole in the law.
TRUTH:This is the law, not a loophole. To simply the Insolvency Act on this point, if you as a Director know you have a company that is Insolvent, you should seek to remedy it – i.e. Liquidate it.
MYTH: You are automatically barred from being a Director.
TRUTH:There is no automatic barring procedure. Directors will sometimes get a ban, but this is only when they have acted unlawfully. If you had acted unlawfully, then the chances are you would know about it.
How can we help
Unlike other Liquidation Companies, we have structured ourselves and our Voluntary Liquidation Services in a way that genuinely helps you the most.
By Liquidating through us, we will:-
- Ensure you are aware of any problems before you commit to Liquidation
- Make sure your Liquidation goes as smoothly as possible
- Deal with any issues before they become a problem
- Try to make sure this is your first and only Liquidation
- Minimize the pain of Voluntary Liquidation
Make a fresh start in business and start your Liquidation – call 0800 612 94 78 now.