Insolvency and family companies

My dad had a favourite saying: ‘Never put off till tomorrow what you can do next week!’ That echoed down the years for me as I read a recent case concerning the insolvency of an owner managed business J Bass and others v B Buchanan (tinyurl.com/4ud9aset).

If ever there was an object lesson on when not to follow my father’s advice this is it.

Substantial business

The taxpayer (Mrs B) through her company provided management services to actors. The business was substantial but it fell into tax arrears and HMRC eventually demanded payment of over £125 000. The company had no means of paying this amount and was put into liquidation.

The key issue was the status of a disputed director’s loan account which stood at a sum in excess of £250 000. The liquidator went to court for a declaration that the account...