Construction business considering options with assistance from Business Debt Service after Covid hits income
A construction business owner considering the company’s viability due to the financial impact of Covid contacted Advice NI’s Business Debt helpline for guidance.
The Full Picture
This client, aged 28, contacted the helpline explaining that his limited company has been unable to trade as usual due to the pandemic restrictions and his income has been greatly reduced. The total debt of £67,000 was made up of an HMRC tax bill and a Bounce Back loan. The construction business has been in operation since 2016. The client does not own a home, has no dependants and no health issues.
The client wanted to discuss options to deal with the debt as there is no regular income being made by the business and this is likely to be the case for the foreseeable future. Nine staff were made redundant with three staff remaining within the company. The business has assets in the form of machinery but this equipment is needed to operate, it would not be possible to sell and keep the business going. However, an equipment sale could be revisited if the business has to close. The debts totalled more than the value of the business assets.
How We Helped
The adviser discussed personal and business support they would be entitled to due to Covid-19 and referred the client to Advice NI’s Welfare team for a benefit check. They then discussed with the client liabilities for the debts and how this would work in relation to a limited company. The client has an accountant and the adviser explained that he should ask then to provide information on the viability of the business going forward.
The business currently has no monthly profit available and options were discussed on this basis including compulsory liquidation, voluntary liquidation, administration and strike-off.
The client was planning to contact HMRC to ask for time to pay/ see if anything else can be deferred due to the Covid-19 pandemic. The Bounce Back loan payments are not due to start yet.
The client had been provided with suitable options to deal with the business debt and will be able to make an informed decision about which option they would like to proceed with if the business does not improve.
The client is aware they can come back to the service if they need any further information and the adviser provided him with a factsheet on limited companies on the Advice NI website called Limited Company Debts.