Video:

Business assets & losses in a service-based economy

Author: Doug Hall, James Kirk (yBC.tv)

Categories: Business risk, Getting advice
Tags: assets, customer databases, directors, forensic accountant, HMRC, Inland Revenue, liability, service, UK economy
Business assets in a service based economy are more about customers, staff and ideas. This can put directors at risk, as Doug Hall discusses in this TV show.

Legal action and business assets

The UK economy has changed as we all know, from largely a manufacturing based to a service based, therefore typically when a company goes into administration, it doesn’t have any assets, it doesn’t have assets that you can kick, plant and machinery, it has intellectual property, it has customer databases, it has customer relationships. Other than that there may be very little that can actually be realised for the benefit of creditors and other stakeholders. However what the company may have is a cause of action against it’s advisors, that may effectively be it’s only asset. We’ve seen actions against directors that we’ve acted on both for the claimant, so creditors who’ve lost out, and also defending actions against directors from companies that have gone into administration, for example where the Inland Revenue, HMRC, has taken action against the directors because they’ve lost out. And we’ve seen examples where the HMRC will actually fund those actions, they’ll provide funding to the liquidators to pursue directors. Again that requires a forensic accountant to look at all the evidence to establish first of all whether the directors are liable, if they have carried out actions before the administration which has caused that loss and secondly if they have what is the value of that loss, how much of the loss that for example the bank or HMRC has suffered has been caused by the actions of the directors. Those situations can be very complex, because in the lead up to an administration company records are not the best that they could be typically, bluntly they can be a mess, so there can be a lot of work to do to piece it all back together and trying to avoid the benefit of hindsight.

Inside Finance TV will continue to follow discussions about business assets and liabilities. Keep an eye out for more from Doug Hall.


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