Why the client needed our help
Our client sought our legal assistance after receiving a demand from the liquidator of his former company for the repayment of £80k, representing an outstanding balance on their Director’s Loan Account. Additionally, the Client had mistakenly made a retrospective PAYE submission after the company had ceased operations and trading. The liquidator did not accept that this action settled the loan account debt, which led to HMRC demanding approximately £40k in taxes, further complicating the situation.
How we helped
Once retained, our first step was to formally notify the liquidator of our intention to thoroughly investigate the situation and provide a detailed response. Our review focused on several key areas, including the validation of the Client’s salary entitlements, the identification of legitimate expenses that could reduce the director’s loan account (DLA) balance, and the clarification of transactions inaccurately charged to the Client’s DLA. Concurrently, the Client received communication from HMRC regarding the tax issue, for which we offered preliminary advice but recommended consulting with his accountant for a resolution.
The Outcome
Our proactive engagement and dialogue on a without prejudice basis facilitated a negotiation that culminated in a settlement agreement. The Client agreed to pay £46k in a single payment, effectively settling the entire debt at a manageable level. Although this settlement did not encompass the HMRC tax issue, which remained the Client’s responsibility through his accountant, it provided a definitive resolution to the primary dispute. This outcome delivered the Client with much-needed certainty and financial relief.
If there was ever a star rating for law firms, Francis Wilks & Jones would score five stars plus. Professional and pro-active, they were able to understand my problem quickly, provide expert advice, outline a solution and put it into place with a successful outcome. I should have gone to them sooner.
A company director
