Manchester-based Insolvency Practitioners Clarke Bell was able to offer advice and help to a small business which was facing severe cashflow difficulties.
PDQ Global Express Limited traded from premises near Leeds and provided a Light Haulage / Courier service within the UK and Europe.
Dave Hodgson and his fellow director were jointly responsible for the day-to-day running of the business. They employed five members of staff, as well as using sub-contractors. The directors were well-known within their industry and this, along with their marketing activities, helped to secure a number of contracts within their first few months of trading.
Although the company's first year of trade showed a loss, they were generally happy with its performance.
There was, however, an issue with the VAT. In the first months of trading the directors were advised that they were unable to charge VAT on their invoices until the company had received a VAT number from HM Revenue and Customs. Once they had a VAT number, they began to charge VAT on their services. For their first VAT Return, they calculated that they were due a refund of about £11,500.
However, when the company submitted the VAT Return they were informed that they should have been charging VAT on invoices from the commencement of trade and, in fact, a VAT payment of £10,100 was due. So the company only received about £1,400 as a refund. This considerable shortfall immediately put a strain on the business and led to cashflow difficulties.
A further problem was caused by the fact that previously that year the directors had placed an associated company into Creditors Voluntary Liquidation and this had made some suppliers reluctant to offer them a credit facility. The directors were then forced to use a personal credit card to provide cash injections to help the running of the company.
Mr Hodgson's fellow director then decided to resign from the company. At the same time his fellow director's wife was appointed as a director, but a few months later she also resigned.
As the one remaining director, Mr Hodgson knew that, due to the combination of the changes in management and the poor cashflow position, the business could not survive in its present condition. So, he approached Clarke Bell for independent financial advice and it was agreed that the company should be wound up through a Creditors Voluntary Liquidation.
Mr Hodgson said:
"I received excellent advice and help from Clarke Bell and am now trading as a sole trader and hope the future will be better than the past.
"Too many adverse things happened at the same time and it just became impossible to carry on. Thankfully Clarke Bell was able to sort it all out for me."....
