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Debt Advice Centre

Welcome to Bridgewood's new Debt Advice Centre. Over the coming months we will be adding posts covering common topics and answering questions that we get from clients on a regular basis.

Our most recent posts are listed below or you can use the categories, tags and search facilities on the right to find the information you are looking for.

If you can't find an answer to your question here, or simply need some specific debt advice then please don't hesitate to give us a call on 0800 987 1040

Recent Posts

The difference between Liquidation and Administration

We’re often asked about the difference between Liquidation and Administration and when one should be used over the other. They’re both formal insolvency procedures to help address a company that is insolvent, but there are significant differences between the two.

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Changes to IR35 and the impact on Personal Service Companies (PSCs)

Introduction

The amount of tax contractors pay through their Personal Service Companies (PSCs) has been on the radar of HM Revenue & Customs (HMRC) for some time.  Intermediaries’ legislation and subsequent changes, most recently this April, are requiring contractors to make decisions about whether or not to continue trading through a limited company.  In some cases clients are now being forced to move onto payroll without having time to plan an appropriate closure of their limited company, which may cause issues especially if the company still has a significant tax liability.

Bridgewood has been advising contractors and working alongside accountants in this area for some time, and in this article we discuss the implications of IR35 and explore what options contractors have, should their company need to cease trading.
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Key changes to insolvency rules in April 2017

Introduction

The most significant changes to insolvency legislation (in England & Wales) in the last three decades will be introduced on the 6th April 2017, aimed at modernising and updating present procedures. The Insolvency Act was introduced in 1986 and any existing rules and amendments will be consolidated into a single piece of legislation, which should streamline systems and communication.

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Personal Liability Notice (PLN) – When can Directors be personally liable?

One of the main reasons people choose to incorporate their business into a limited company (Ltd) is for the extra protection this corporate structure affords the individual.  Incorporation helps separate the individual owner(s) and the business financially, so the business becomes an entity in its own right.

However, Section 64 of the Social Security Administration Act 1998 gives HM Revenue & Customs the power to issue a Personal Liability Notice (PLN) to hold those behind the company personally liable in certain situations.
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Who gets paid first in a Company Liquidation?

Introduction

There are two ways an insolvent company can be liquidated – either voluntarily by the directors instructing an Insolvency Practitioner to convene the relevant meetings of shareholders and creditors; or compulsorily, by a creditor petitioning at court for the winding up of the company. In both cases it may well be that there are sufficient assets realised into the liquidation for payments to be made to some or all creditors. However there is a strict hierarchy in place which dictates the order within which creditors are paid and the aim of this briefing note is to provide an overview of the order of payments.

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Understanding Transactions at an Undervalue and Preferences when a Company is Insolvent

Introduction

When a company is insolvent and the Directors believe it has no future, they should be careful before entering in to transactions or making payments to creditors and stakeholders, which are not in the interest of the company.  A Liquidator or Administrator (also referred to as the Office Holder) has a duty to investigate such transactions or payments, and has the power to apply to the court to set them aside if necessary.

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Could your company benefit from an Independent Business Review (IBR)?

Introduction

A lending bank will often request an Independent Business Review (IBR) when a company has breached or is expecting to breach its banking covenants.  IBR’s are normally viewed as a painful, expensive exercise enforced by a lending bank, which can lead to further financial problems for companies.

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How to identify an insolvent company

Directors have a legal duty to ensure that their company is not trading whilst insolvent.  But what does “trading insolvent” really mean, and how can it correctly be identified?  This month’s article provides an overview of the insolvency tests that can be applied to help company directors make an appropriate assessment of the situation.

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Company Voluntary Arrangements (CVAs) – A Basic Guide

Introduction

In March BHS entered into a Company Voluntary Arrangement (CVA), an insolvency procedure designed to ensure the long-term viability of a business through a re-structuring of its liabilities to creditors.  However less than 5 weeks later the company has entered into Administration and its prospects look bleak, with over £1.3bn in debts including a pension deficit of £571million.

Such a high-profile case has no doubt caused some observers to question the benefit or validity of CVAs.  However the BHS case is a very complex one and, for your more typical client, CVAs remain an important insolvency procedure, when used in the right circumstances.  If a business has a viable future but is hampered by legacy debts, then a CVA is often the best way of ensuring that the company can continue to trade, through a formal restructuring of its unsecured debts.

So here is a basic guide to the CVA, which we hope you will find useful.

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5 Top Tips for achieving a successful Time to Pay Arrangement

The start of the year is often a difficult time for companies as they struggle with erratic or low trading through the winter period.  This can result in a VAT quarter or PAYE/NI contributions being missed, causing concern for business owners that are unsure of how to deal with HMRC.

We all know that Taxes should be paid when they fall due, however HMRC will usually agree a payment arrangement, known as Time to Pay (TTP) in order to clear any arrears.  Such arrangements allow tax arrears to be collected in a cost effective way; normally over a period of 6-12 months but sometimes for longer.

Here are 5 top tips to help you and your clients achieve the best outcome with HMRC:

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