Selling Ltd Co with debt

[Tiptopp]

I have been contracting for a number of years, and have been failing to keep up with accountancy duties, to the extent that I've had to decide to go perm, and have been for a year. My company still owes HMRC money which I have no way of paying in the short term.

I'm weighing up my options, and notwithstanding my moral duties, have an option of selling my company, along with the debt, to someone who will take on these liabilities.

I have no income or assets, and virtually nothing in the bank.

Does anyone know of a LEGAL reason why I can't do this? Essentially, it's a sale of my shares, and there's nothing that stops me doing that. But does HMRC have any comeback on me personally if the person to whom I sell decides not to pay them?

The companies who seem to offer this type of transaction include Knowsley Recovery and National Company Rescue, amongst others. I've done a quick search of these forums and can't find any reference to them, so is there any experience of this type of scheme in this community?

Thanks!

[northernladuk]

But what does the company have to offer? Usually when companies with debts are bought it's because they've got some kind of on going trade, IP, customer databases, patents or whatever that can be capitalised. Either that or the debts owed and are significant enough to be chased and recouped by the company buying them.

There is also a question of what kind of debt. It could be because you can't pay some suppliers because other suppliers haven't paid you and the like. You mention your debt is to HMRC due to (I'm guessing) illegal dividends and you've spent the tax money. There is nothing to be recovered there, that's an outright debt that cannot be paid back by anything the company is owed. Who on earth is gonna buy that? I think illegal dividends is on you you personally as well isn't it as you personally have to pay it back. Not sure you can even off load that kind of debt even by selling the company can you?

Apart from the issue of whether the debt is personally tied to you I guess there is nothing legally stopping you but who is gonna buy it? There has to be something in it for the buyer.

[Fred Bloggs]

But what does the company have to offer? Usually when companies with debts are bought it's because they've got some kind of on going trade, IP, customer databases, patents or whatever that can be capitalised. Either that or the debts owed and are significant enough to be chased and recouped by the company buying them.

A dead contracting company with debts that can't be recovered is absolutely worthless. What do you think your company offers a prospective buyer?

All I can think of to say is, good luck with that plan.

[Michael at BI Accountancy]

You have to ask yourself what is in it for them?

I would guess they are looking to buy this to then look into the company as to whether you have acted in the company's best interests. Do note that just because you would no longer be director does not mean that you cannot still be held personable liable for not acting in the best interests of the company when it becomes insolvent.

Best bet here is to get your own liquidator involved, come up with a repayment arrangement if it is that you have not acted in the best interests of the company.

[ladymuck]

Are you saying you have money owed to your company that you have been unable to recover and you want a factoring company to buy those creditors off you?

It reads like your company is in debt and you're trying to sell your liabilities onto another company. I can't see how that would work because who do they recover those monies from?

[northernladuk]

Exactly what are the debts. Straight non payment of VAT and Corp tax or a mess of illegal dividends and directors loans?

[Tiptopp]

Exactly what are the debts. Straight non payment of VAT and Corp tax or a mess of illegal dividends and directors loans?

I've paid all VAT due. It's Corp Tax and penalties. But I can't pay because of directors loans.

[Fred Bloggs]

I've paid all VAT due. It's Corp Tax and penalties. But I can't pay because of directors loans.

Then you are in the smelly stuff. I hope you get to pay your dues and learn that running a limited company comes with responsibilities.

[northernladuk]

I've paid all VAT due. It's Corp Tax and penalties. But I can't pay because of directors loans.

I'd be very surprised if you can offload the company in that position. Not paying penalties potentially leads to other legal processes which I'm pretty sure you can't pass on. The directors loans are also linked to you so doubt you can legally sign that off either.

Is there a BBL outstanding out of interest?

But no one is every gonna buy a company that owes taxes with absolutely no benefit so it's all a bit hypothetical. Spend your time in looking for other avenues to sort this mess out. Selling your company is certainly not one of them.

[courtg9000]

no one will buy it.
There really isn't a market for contracting companies in business transfer.
Some contractor companies do have value but it's usually in intellectual property.