Summer 2006 Newsletter


Brave New World

Business Not Pleasure

Summertime Blues

All That Glitters...

Casting The Net

Trust Gordon?

It Ain't Over...

One In The Eye

Keep Your Nose Clean

Foreign Affairs

When Is A Car...

Don't Walk Away

Avoiding, The Issue

Brown Is Anti-PC

VAT's Up Doc?

Fuel's Gold

An Age-old Question?

That's Unfair!

Year In Year Out

How Hard To Try?

It's A Rip-Off!

Outlaws Win

Show Some Restraint

Not Our Problem

They Cannot Be Serious?


Pension Disappointments

Don't Walk Away

One of the reasons for trading through a company is that the owners are not personally liable for the company's debts - if the company goes bust, you can dust yourself down and start again. You are not personally bankrupted. Of course, some people have used this over the years for shady business dealings - "phoenix" companies which disappear owing money and then reappear with similar names, similar owners and directors, and similar behaviour. But for genuine entrepreneurs, it is a relief to be protected from some of the risks that might otherwise put most people off going into business at all.

It's important to be aware that there are limitations on walking away from the company's debts. If you carry on trading when you know that the creditors won't be paid, you become personally liable for the losses they incur. Another example came up in a recent case. There is a specific rule that the National Insurance Contributions payable by a company can become the personal responsibility of any officer of the company whose "fraud or neglect" leads to them not being paid to the Revenue. A man ran a company with a payroll of £1.5m over a six month period, but no bank account. It went into liquidation, and NICs of over £200,000 were unpaid. The Appeal Commissioners agreed with HMRC that the director's running of the company - not paying any NICs month after month, even though he knew they were due - was so imprudent that the law was triggered. He would have to pay.

It's always important to understand what your responsibilities are as a director of a company. If you want to discuss them, we will be happy to help.