Some directors are set to be hit with new challenges after the Insolvency Service was granted new powers to tackle them.
Certain company owners look to use the dissolution process to avoid paying back their liabilities; anybody who does this will be faced with a strong level of scrutiny from the Insolvency Service.
New legislation gives the Insolvency Service more wiggle room to investigate company directors who aim to abuse the process.
The Rating and Directors Disqualification Act has been brought into play to tackle directors that intend to dissolve companies and avoid repaying Government-backed loans that were designed to help businesses during the global pandemic.
On the other hand, the government has recently announced that they will be providing £1.5-billlion in business rates to sectors that have struggled the most financially over the pandemic and haven’t been eligible for any existing support mechanism that has been linked to business rates. These changes came into play on 15 December 2021.
What does that mean for you?
Essentially, the Insolvency Service will be tightening up its grasp on people who they think are trying to bend its rules. They might also be asked to intervene with trading businesses if they think that something is afoot.
Directors can end up facing some serious sanctions if the Insolvency Service finds them guilty of misconduct. This can include up to 15 years of disqualification from being a director to being personally liable for business debts.
The Business Secretary will also have the ability to apply to the court and, from this situation, they can chase up former directors who haven’t paid their creditors in the past.
What this means is that any irregularities as a business director will not be tolerated in the slightest. We suggest that you get in touch with our director support team if you feel like you may have misunderstood your obligations as a business director.
What the experts have said
Kwasi Kwarteng, the Business Secretary, said:
“We want the UK to be the best place in the world to do business and we have provided unprecedented support to businesses to help them through the pandemic.
“These new powers will curb those rogue directors who seek to avoid paying back their debts, including government loans provided to support businesses and save jobs. Government is committed to tackle those who seek to leave the British taxpayer out of pocket by abusing the covid financial support that has been so vital to businesses.”
Managing director of UK FInance, Stephen Pegge, added:
“The ability to dissolve a company when necessary is a right reserved in legitimate circumstances where there are no outstanding creditors, however, it can be open to abuse.
The banking and finance industry therefore supports this legislation which will provide much needed powers to the Insolvency Service to help hold rogue directors to account by providing additional deterrents and easier enforcement of the rules.”
What can we do for you?
If you feel like you may have misunderstood the expectations of being a director, you can come to us for help. We can help you build your case and find a resolution to your financial problems.
We offer advice and support to directors with all kinds of issues and, in this situation, we would be able to work with you to help you with your plight.
Our team has over 60 years of experience helping directors with business advice.