The client, an independent contractor operating via a limited company, was considering permanent employment at £100,000 per annum while facing personal and corporate tax liabilities totalling £90,000. Advice was sought on whether voluntary liquidation could serve as a viable means of addressing these debts.
The client, an independent contractor operating through a limited company, was considering a transition to permanent employment with a proposed salary of £100,000 per annum. At the time of instruction, the client faced significant outstanding liabilities, including a self-assessment tax bill of £50,000 and corporation tax obligations totalling £40,000. The client sought advice on whether voluntary liquidation of the company could serve as a viable mechanism for addressing these debts.
Counsel provided general advice on both corporate and personal insolvency options, outlining the respective advantages and limitations. While personal bankruptcy could offer relief from certain liabilities, Counsel cautioned that it would have a materially adverse impact on the client’s credit profile and could jeopardise the prospective employment opportunity. In relation to corporate liquidation, Counsel advised that the appointment of an insolvency practitioner may result in the sale of company assets to satisfy creditor claims, and that directors’ conduct and personal guarantees (if any) would require scrutiny. The client was advised of the risks and implications associated with each route and was supported in making an informed decision as to the appropriate course of action.
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