Insolvency investigation payroll company

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Facts:

  • Industry sector: Payroll provider
  • Annual turnover for Group: >£100m
  • Employees: 18
  • HMRC: £4m PAYE/NIC & VAT arrears on directors’ statement of affairs

Background

The company was part of a larger Group of companies whose main customers were employment agencies that referred personnel to the Group. A total of c4,000 salary payments were processed by the Group on a weekly basis.

The company entered creditors’ voluntary liquidation in 2018 with the shareholders choice of liquidator being appointed.

McTear Williams & Wood appointment

The major creditor requested that the liquidators sought a decision from creditors under Section 171 of the Insolvency Act 1986 to appoint McTear Williams & Wood as liquidator. A decision procedure was duly convened and creditors voted to appoint us.

McTear Williams & Wood investigations

Immediately on appointment MWW secured the remaining books and records of the company including crucially the ‘payroll portal’. Access to the payroll portal allowed MWW to review the payroll records and establish that there was substantial underdeclared PAYE/NIC.

Claims

  • Misfeasance/Breach of Duty – There were clear claims against the director for breach of duty.
  • Transactions at Undervalue – Where a company is insolvent and makes a gift or enters into a transaction where it receives significantly less value than the transaction is worth such a transaction can be challenged by a liquidator. In this case as part of the investigations an analysis of the company’s bank statements was carried out using specialist software. As a result transactions at an undervalue totaling £60m were identified.
  • Preferences – If a company pays a creditor ahead of others or does anything to put a creditor in a better position at a time when the company is insolvent a liquidator can challenge the transaction. Here payments to associated companies totaling several million pounds were identified

Results

Following extensive investigations claims were brought against various parties which has resulted in additional realisations in excess of £10m.

If you would like to discuss any aspect of the investigation services we can offer or to arrange a confidential consultation please contact our UK market leading team of specialists on 0800 331 7417.

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