Wrongful trading occurs when a director allows a company to continue trading when there is no reasonable prospect of it avoiding insolvent liquidation. It is possible, if wrongful trading can be proven, that the director(s) may become personally liable for some of the company’s debts.
There are a number of key areas that will be looked at when assessing whether a company is guilty of wrongful trading, some examples of which are:
Building up HMRC arrears including PAYE, NIC and VAT
Taking credit from suppliers without the prospect of payment
Excessive salaries being drawn
Continually increasing liabilities
Failure to file accounts/annual returns
This list is no exhaustive and you should contact us for further advice and support in this area.
Please note that wrongful trading differs from trading whilst insolvent and fraudulent trading. Contact us on 08000 724 558 now for free advice and support on wrongful trading from one of our team.