Guides & FAQs
Straight answers, before you decide anything.
The questions directors actually ask, answered plainly and reviewed by Michael O'Connor. If yours is not here, ask him on 0345 017 9773.
Short answer
Most directors want to know three things: how bad is it, what happens to me personally, and what does it cost. Each guide below answers one of those in a couple of minutes, with no jargon and nothing sold to you.
IPA member
25+ years experienceFree first conversationFace-to-face or ZoomHMRC & creditors
What happens if my company can't pay HMRC?HMRC will chase the debt, add interest and penalties, and escalate: reminders, then a debt management call, then enforcement, and eventually a winding-up petition. Most companies can agree a time-to-pay arrangement if they ask early and the instalments are realistic. Ignoring HMRC is what turns a payment problem into an insolvency problem.Read the answer What is a winding-up petition, and what do I do in the first 7 days?A winding-up petition is a creditor asking the court to close your company. The critical point is advertisement in the Gazette, which usually happens around seven business days after service and normally causes the bank to freeze the company's account. Act on the day you receive it: get advice, protect payroll, and decide whether to dispute, pay, or take a different route.Read the answer
Closing a company
CVL vs compulsory liquidation: what's the difference?A Creditors' Voluntary Liquidation is started by the company's own directors and shareholders, so you choose the timing and the licensed insolvency practitioner. A compulsory liquidation is forced on the company by a creditor's court petition, usually with a frozen bank account and an Official Receiver appointed. Both close the company, but one leaves you in control of the process.Read the answer What happens to a bounce back loan if my company closes?A bounce back loan was taken by the company, not by you, and there is no personal guarantee. If the company is liquidated, the loan is an unsecured company debt and is dealt with in the liquidation. Directors are only at personal risk where the money was not used for the benefit of the business, or where the application was not accurate.Read the answer
You personally
Will I be personally liable for company debts?Usually not. A limited company is a separate legal person, so its debts are its own. You become personally exposed mainly through personal guarantees, an overdrawn director's loan account, unpaid share capital, certain HMRC notices, or a finding of wrongful or fraudulent trading. Each of those can be identified and planned for in advance.Read the answer What happens to my director's loan account in liquidation?If your director's loan account is overdrawn, you owe that money to the company. In liquidation it becomes an asset the liquidator is expected to collect, and they can pursue you personally for it. If the account is in credit, you are an unsecured creditor and rank with the others. Knowing the figure before liquidation starts is always better than after.Read the answer
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This page is general information, not legal or financial advice.