Course of action for owing money from ceased business

T

taz

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Husband ceased business about 5-6 weeks ago now and went back into working for an employer. He was a sole trader and informed the revenue of his ceasing business at the time. I am getting all receipts and account information up to date for 2007 for submission by October and I have a few queries:
He has an OD on his bank account and its at 2k and owes builder providers 3.5k, he is owed approx. 3k but customers are not paying up no matter how much you call them, what happens in this instance does he just start paying off his debts from his wages now or is there anything we need to do?
Personal Money was put into business to pay builders providers as customers were not paying on time and now there is no business income so do we write this money off?
We will be going to our accountant I just wanted some opinions and information first.

Thanks for your advice.
 
If you cease with losses then as a sole-trader unfortunately you are personally responsible. You may be able to come to an arrangement with the bank on the o/d to pay over time.

If you end up with losses on the accounts, then for tax purposes these are allowable against other income including PAYE, your accountant will advise further. That might give you some break when it comes to filing the returns.
 
You should pass on the debts you are owed to a collection agent who would try to collect on a "no foal no fee basis"
 
The difficulty the OP has is once they have ceased, and customers see that, it becomes next to impossible to get paid. I've seen it so many times. While most people would honour their obligations there are those who see this as a way out of paying. The bank will have seen this too and hopefully will take a sympathetic view regarding some appropriate schedule of payments to clear the outstanding debt.
 
I dealt with a voluntary dissolution for a friend who had started a decking business a couple of years back and found himself in a similar situation, only the losses were much much bigger and he owed a substantial amount to the builders providers. He had a limited company, so it was different, however.

I was able to get some of the money he was owed in, by sending registered seven day letters and threatening solicitors action. They still owed the money and were trying to weasel out of paying, however, it did work and we got a fair bit in because the company was still there, so we could have started a legal action. Also, he came up with a repayment schedule for the builders providers and paid it off out of his wages. I know being a limited company, it would have been easier for him not to pay, but he was a very honourable person and would not see anyone out of pocket, due to what he called his "mistakes".

Good luck with it.
 
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