Following the outbreak of a global pandemic unprecedented in recent memory, the UK is now reeling from the devastating effects of the coronavirus. Small and medium-sized businesses throughout the nation will already have been forced to come to terms with this new reality, through a combination of staff illness, forced closures, supply chain disruption and loss of business.
The law allows any person to be treated as a director even though that person has not been formally appointed as a director. Such directors are known as de-facto directors. By contrast, a de jure director is a person who has been validly appointed as a director.
The recent case of Re Snelling House Ltd (In Liquidation) [2012] EWHC 440 (Ch) serves as a useful reminder to consider possible claims against de-facto directors who may be acting under the wrong impression that they are beyond reprehension.
The facts
Payless Cash & Carry Limited v Patel and Others [2011]
The decision of Mr Justice Mann in the High Court in Payless Cash & Carry Limited v Patel and Others [2011] exemplifies the detailed investigation which can be carried out by the appointment of a provisional liquidator or a liquidator in cases of suspected fraud. It also contains some useful comments on the extent of the liquidator’s evidential burden in such cases.
The High Court in England has made an interesting decision in the case of ED Games Limited. A director of that company procured that it did not pay VAT for a period prior to its liquidation and in that period, the net deficit on the company's balance sheet increased. The High Court has held that the director could be held personally liable for the increase in such net deficit.
A business you are buying or selling, if reorganised for sale, may be less valuable if you do not avoid tax pitfalls. This note highlights the most common pitfalls, including those related to an insolvency. You can avoid most with planning.
Reorganisations
Many businesses will now be considering transactions involving corporate reorganisations. They might want to take advantage of market conditions to buy or be considering the sale of business units to refocus strategy. Or they might become involved in an insolvency or reconstruction.
A business you are buying or selling, if reorganised for sale, may be less valuable if you do not avoid tax pitfalls. This note highlights the most common pitfalls, including those related to an insolvency. You can avoid most with planning.
Reorganisations
Many businesses will now be considering transactions involving corporate reorganisations. They might want to take advantage of market conditions to buy or be considering the sale of business units to refocus strategy. Or they might become involved in an insolvency or reconstruction.
The Labor and Employment Group at Hogan Lovells is proud to have contributed to the 2020 version of the firm’s Doing Business in the United States Guide. The Guide provides a high-level overview of the laws and practices important to foreign investors interested in operating in the United States, including recent legal developments.
On 22 April 2015 the Supreme Court handed down its judgment in the case of Jetivia SA and another v Bilta (UK) Ltd (in liquidation) and others [2015] UKSC 23, which was heard in October last year. In short it decided that: 1) defendant directors cannot raise illegality as a defence to a claim by a company where the directors themselves acted wrongfully; and 2) a claim in fraudulent trading under Section 213 of the Insolvency Act 1986 (Section 213)has extra-territorial effect.
Background
Key Point
The Court of Appeal has held that a UK company undergoing a financial restructuring was not entitled to recover VAT charged by accountants who prepared reports for the company's lenders use during the restructuring process.
The facts
In the past, HMRC has allowed insolvency practitioners to cancel the VAT registration of businesses at an early stage and account for VAT on any subsequent supplies using form VAT 833. HMRC has received legal confirmation that a deregistered business cannot issue a valid VAT invoice, which could result in VAT registered buyers of assets from insolvent businesses being denied claims for input tax. As a result, HMRC will no longer allow the early deregistration of insolvent businesses.