
Will a voluntary liquidation harm my chances of future investment? (UK) - worriedinlondon
In a nutshell, I have a business idea that I would love to work on, that may require investment (I&#x27;ve had positive initial feedback).<p>But I have a large outstanding debt to HMRC, which I am struggling to pay (I made mistakes when I started contracting, and didn&#x27;t put enough money aside. I&#x27;ve since learned my lesson.) A voluntary liquidation looks like a sensible option at this point.<p>But I am worried that winding up my company in this will this appear as a stain on my character, and put off potential investors?<p>Is this a legitimate concern? Any help deeply appreciated!
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charlesdm
Does voluntary liquidation mean personal bankruptcy? Or is this at the
corporate level (i.e. your Ltd company)? Who owes the debt - you or the
company? HMRC debt might also be harder to get out of.

In general, corporate bankruptcy tends not to be a big problem. Personal
bankruptcy, well, you become toxic to banks. It usually doesn't matter much to
angel investors, but it can be a problem when trying to secure debt financing
through traditional channels. It can however become a problem trying to secure
personal stuff like credit cards or mortgages.

It's a good idea to talk to a lawyer about this.

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worriedinlondon
Thanks for the advice. It's just the company that would be affected, I don't
have any debts personally. Cheers!

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charlesdm
Also, and it depends on if there's a chance you might be personally liable,
but if you intend to let the company go bankrupt, you might as well try and
use that to negotiate the debt down (if that's at all possible).

For example, let's say your debt is £50,000. If you declare bankruptcy, they
get £0. Offer to pay them £15-25,000 - if they don't agree, declare
bankruptcy, and they get nothing.

Not sure if this will work with the tax authority, but I've heard this being
used with private debt (bank loans) and it can work.

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opless
I'm not an accountant/tax adviser, and I would take advice from yours.

Many entrepreneurs fail often. Debts however are another thing. Especially
with HMRC, I'd have a chat with a professional about your HMRC debt.

That aside, investors would want assurances their money go into the business
and not the paying off your other businesses or any personal debt :)

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BjoernKW
I'm pretty sure Her Majesty won't simply release you - or your company for
that matter - from tax debt just because you declare bankruptcy, personal or
otherwise. Tax debts are notoriously difficult to get rid off in any other way
than paying them. Maybe, payment by instalments is a possibility but otherwise
you might not have too many options.

Besides, this also depends on what kind of company you founded. If I remember
correctly, both the director and the secretary of a private limited company
for instance are personally liable for the company's tax debts as well (at
least to a certain extent).

