|
Swore I'd never post on here again after the experience last time I did. But I'll make an exception - and certainly not to gloat (although heaven knows, it would be no more than some of the EDIT dont ruin a good post ..Mutts from on here who have been gloating on Bulls board over recent weeks would deserve).
Just want to make a point, as someone who probably has more experience and knowledge of this kind of situation than most who post on these boards - given what I do for a living. Firstly, I see people have been asking where the debt came from? I do not know the answer to that, and this does not help much. but I can tell you where the debt to HMRC for most companies who find themselves in this situation comes from. It comes from a combination of: 1. Tax and NIC deducted from employees salaries, which should be paid to HMRC by 19th of the following month. It is money that was never the company's - it is deductions from employees not yet paid over. 2. The employer's NIC contribution for those employees - ditto re payment date. 3. VAT charged to and collected from "customers" (speccies, sponsors, sky, RFL...most club income is standard-rated) on behalf of HMRC. Payable at latest a month after the end of each VAT quarter. And OK its net of VAT incurred, but a large part of club costs are people-costs which are outside of the VAT regime so you always end up with a sizeable VAT liability regardless of what profits or losses you are making. And again, this money was never the company's. In most cases where HMRC has to resort to the High Court for a winding-up order, it is because the business has failed to pay over THESE taxes, which in the main were collected on behalf of HMRC and were NEVER THE BUSINESS's MONEY IN THE FIRST PLACE. The question I always put to people trying to come to terms with this is "how would YOU feel if the tax and NICs deducted from your pay by your employer were not paid over to the taxman, but the employer instead used them to finance their business?" (And many people not unreasonably IMO answer "better in the boss's pocket than the taxman's, if it keeps me in a job") Now there are other taxes which might be unpaid, like corporation tax (which you have to make profits to pay...) and capital gains tax (e.g on sale of ground), so its not always the case that HMRC has lost patience because of the business holding on to money that was never actually theirs. Someone mentioned "image rights" - alluding to arrears of PAYE and NICs following any "grossing-up" settlement with HMRC for payments which should have been treated as pay and therefor taxed. Any or all of these may or may not be involved, although I have not heard Wakey being mentioned as a club most at risk under this last item - other clubs starting with "W" maybe... But, as I said, its usually PAYE/NIC and VAT which triggers a winding up petition. Back in the old days of "Crown Preference", most tax debts were "preferential creditors", paid out before the mass of other "unsecured" creditors. This meant that HMIT and HMC&E (as they then were) were generally a lot less likely to press for winding-up - since they would get paid in preference anyway. But following legislation a few years ago HMRC are now only on a par with all the other creditors. And since they can often be the one who does not get paid because if you don't pay your staff or suppliers or lenders you are dead, HMRC are these days far more worried about getting paid than they ever were. Hence a big increase in HMRC initiating winding-up. And for the avoidance of doubt, the reports refer to a Winding-Up hearing. This is no minor difficulty. If the High Court believes the business is insolvent, in the absence of application by the company for an Administration Order then the High Court may well rule that the business is prima facie insolvent and grant the order. And the minute it does that and the order is stamped by the court, you are in liquidation. No way back. Dead. And it looks like, from what has been reported, that was what your club has very narrowly avoided. Don't be confused by talk of "receivers" and "receivership". That is an increasingly less common process whereby a secured lender's appointed insolvency practitioner/s takes control of the business to "receive" its assets to sell them to pay off the lender (bit like a glorified bailiff!). The reports refer to an "official receiver" - totally different. That is an official appointed by the court to conduct the winding up of a company put into compulsory liquidation by the court. That is a quick and abbreviated few notes of mainly general application, which may or may not be relevant and of some assistance. I take no satisfaction from what I read today (came as quite a shock, to be honest). It is not good for anyone (except maybe the insolvency practitioners, accountants and lawyers). I hope this gets resolved so your club can move on. |
|
Swore I'd never post on here again after the experience last time I did. But I'll make an exception - and certainly not to gloat (although heaven knows, it would be no more than some of the EDIT dont ruin a good post ..Mutts from on here who have been gloating on Bulls board over recent weeks would deserve).
Just want to make a point, as someone who probably has more experience and knowledge of this kind of situation than most who post on these boards - given what I do for a living. Firstly, I see people have been asking where the debt came from? I do not know the answer to that, and this does not help much. but I can tell you where the debt to HMRC for most companies who find themselves in this situation comes from. It comes from a combination of: 1. Tax and NIC deducted from employees salaries, which should be paid to HMRC by 19th of the following month. It is money that was never the company's - it is deductions from employees not yet paid over. 2. The employer's NIC contribution for those employees - ditto re payment date. 3. VAT charged to and collected from "customers" (speccies, sponsors, sky, RFL...most club income is standard-rated) on behalf of HMRC. Payable at latest a month after the end of each VAT quarter. And OK its net of VAT incurred, but a large part of club costs are people-costs which are outside of the VAT regime so you always end up with a sizeable VAT liability regardless of what profits or losses you are making. And again, this money was never the company's. In most cases where HMRC has to resort to the High Court for a winding-up order, it is because the business has failed to pay over THESE taxes, which in the main were collected on behalf of HMRC and were NEVER THE BUSINESS's MONEY IN THE FIRST PLACE. The question I always put to people trying to come to terms with this is "how would YOU feel if the tax and NICs deducted from your pay by your employer were not paid over to the taxman, but the employer instead used them to finance their business?" (And many people not unreasonably IMO answer "better in the boss's pocket than the taxman's, if it keeps me in a job") Now there are other taxes which might be unpaid, like corporation tax (which you have to make profits to pay...) and capital gains tax (e.g on sale of ground), so its not always the case that HMRC has lost patience because of the business holding on to money that was never actually theirs. Someone mentioned "image rights" - alluding to arrears of PAYE and NICs following any "grossing-up" settlement with HMRC for payments which should have been treated as pay and therefor taxed. Any or all of these may or may not be involved, although I have not heard Wakey being mentioned as a club most at risk under this last item - other clubs starting with "W" maybe... But, as I said, its usually PAYE/NIC and VAT which triggers a winding up petition. Back in the old days of "Crown Preference", most tax debts were "preferential creditors", paid out before the mass of other "unsecured" creditors. This meant that HMIT and HMC&E (as they then were) were generally a lot less likely to press for winding-up - since they would get paid in preference anyway. But following legislation a few years ago HMRC are now only on a par with all the other creditors. And since they can often be the one who does not get paid because if you don't pay your staff or suppliers or lenders you are dead, HMRC are these days far more worried about getting paid than they ever were. Hence a big increase in HMRC initiating winding-up. And for the avoidance of doubt, the reports refer to a Winding-Up hearing. This is no minor difficulty. If the High Court believes the business is insolvent, in the absence of application by the company for an Administration Order then the High Court may well rule that the business is prima facie insolvent and grant the order. And the minute it does that and the order is stamped by the court, you are in liquidation. No way back. Dead. And it looks like, from what has been reported, that was what your club has very narrowly avoided. Don't be confused by talk of "receivers" and "receivership". That is an increasingly less common process whereby a secured lender's appointed insolvency practitioner/s takes control of the business to "receive" its assets to sell them to pay off the lender (bit like a glorified bailiff!). The reports refer to an "official receiver" - totally different. That is an official appointed by the court to conduct the winding up of a company put into compulsory liquidation by the court. That is a quick and abbreviated few notes of mainly general application, which may or may not be relevant and of some assistance. I take no satisfaction from what I read today (came as quite a shock, to be honest). It is not good for anyone (except maybe the insolvency practitioners, accountants and lawyers). I hope this gets resolved so your club can move on. |
|
|
