Government Gigabit Scheme a Boon for the Small Business

The government has just launched a new scheme across the UK to assist small to medium sized businesses in upgrading their broadband. The Gigabit Broadband Voucher Scheme will see firms being able to claim up to £3,000 to upgrade their broadband.
 

The Gigabit Broadband Voucher Scheme will enable smaller companies and the local communities that they are a part of to receive grants of up to £3,000, allowing them to upgrade their broadband to a Gigabit-capable connection.
 

This means that companies will find it easier to take advantage of today’s modern working technologies such as VoIP, cloud-conferencing and other hosted solutions known to save time and money and make everyday tasks and communication so much more streamlined and efficient.
 

The Gigabit Scheme forms part of the Local Full Fibre Networks programme which is backed by a £200 million government investment.
 

Secretary of State for Digital, Culture, Media and Sport, Matt Hancock, said: “Small businesses are the backbone of the British economy and now they can turbo-charge their connectivity with gigabit speeds.
 

 “By building a full fibre future for Britain we are laying the foundations for a digital infrastructure capable of delivering today what the next generation will need tomorrow.”
 

The scheme will be supplied by Daisy Group, the largest independent supplier of business communications and IT solutions in the UK. Julien Parven, marketing director of its small to medium sized business division, says: “Digital transformation should be a top priority for SMBs and we are passionate about helping companies to get started on that path so that they can maximise the opportunities around them.
 

“This scheme to provide customers with greater bandwidth certainly promotes that priority in providing the backbone to launch their digital futures.”
 

To be eligible for the Gigabit Voucher Scheme, companies must be UK-based; employ fewer than 250 employees; have a turnover of less than £50 million and / or an annual balance sheet total that does not exceed £43 million. Sole traders are also eligible.
 

For more information visit https://gigabitvoucher.culture.gov.uk/.

Fraudulent Trading in Insolvency Explained

In our last post we discussed ways to avoid accusations of wrongful trading in insolvency. We said that whilst wrongful trading is a result of negligence, fraudulent trading is more about dishonesty. Fraudulent trading occurs when a director purposely sets out to deceive or defraud creditors, or acts unethically or recklessly. It is a very serious offence that leads to criminal proceedings.

 

Fraudulent trading is covered by Section 213 of the Insolvency Act 1986. Where a company is entering into insolvency, it will find itself in the midst of a very in-depth investigation by the liquidator, during which the liquidator will look to ascertain whether any of the directors were guilty of wrongful or fraudulent trading at the time of being insolvent.

 

If the liquidator finds any evidence that could imply that the directors we operating outside of their official duties then this evidence will form part of the report they submit to the Secretary of State.

What is fraudulent trading?

If it can be proved that a director did any of the following, it is likely they will be subject to a fraudulent trading claim: 

• Accepted payments from customers for orders they knew they would not be able to fulfil
• Made attempts to maximise income in advance of liquidation
• Used credit facilities in the knowledge that the debts incurred could not be paid
• Sold company assets under market value
• Placed a particular creditor or creditors in a preferential position, for example by paying one creditor but not another (preferences)

What is misfeasance?

Any director or manager of a company entering liquidation who uses funds for an unauthorised or improper purpose; who makes or takes unauthorised loans or remuneration to other directors or who takes improper dividends is likely to be investigated under Section 212 of the Insolvency Act.

If found guilty, the director in question could well be forced to repay or restore any funds or property that has been misapplied, or pay the sum involved into the assets of the company.

How to deal with financial challenges in business

There is plenty of help available to businesses facing financial difficulties. The thing NOT to do is ignore what is going on and use hope as a tactic or, worse still, any of the actions listed above. Instead, be open and upfront with everyone. Talk to your creditors. Discuss things with your bookkeepers and accountant. Ask the bank for advice. No one will want to see you fail and will be ready and willing to help, as long as you just ask.

How to Avoid Wrongful Trading in Insolvency

The wrongful or fraudulent trading provisions of the Insolvency Act 1986 place a responsibility on directors of failed companies to contribute to the company’s assets.

 

Even though claims against directors for wrongful trading are not that common, with only just a little over 5 per cent of directors disqualified following insolvency proceedings, wrongful trading can still prove a risk to directors of companies facing insolvency.

 

Section 214 of the Insolvency Act states that if before a company is wound up, a director knew or ought to have known that there was no real chance of the company being able to avoid insolvent liquidation, and then from then on they failed to do whatever they could practicably do to minimise loss to creditors, then the court may force a director to make a personal contribution towards the company’s debts.
 

The situation is assessed against the standard of a reasonable diligent person who has the experience, skill and knowledge expected of a director, together with any additional experience, skill and knowledge that the individual is in possession of.

 

In other words, it’s all about negligence rather than dishonesty. Dishonesty is classed as fraudulent trading, and this is dealt with under Section 213 of the Act. We’ll look at that in a separate article. For now, let’s look at ways directors facing insolvency can avoid a claim being made against them for wrongful trading.

Keep appropriate accounting records

 

Without sufficient accounting records and where returns and payments are not made on time to Companies House and HMRC, the road ahead for a director in insolvency is not going to look too good. Providing you keep accurate and up to date records and make sure that everything is filed and paid on time, the court will look more favourably upon you.

Never use company funds or assets for personal benefit

Making use of company funds or assets for personal gain will be classed as wrongful trading as this obviously does not constitute doing everything practical to ensure creditors do not lose out. Be sure to document any drawings on company funds and that such drawings are only made for valid reasons. In addition, you should never draw excessive salaries or dividends during times of financial difficulty.

Be open with creditors

It is vital not to attempt to hide things with suppliers or anyone you owe money to. Being upfront about your situation and seeking practical ways to resolve payment issues will be looked upon favourably by the court.

Do not delay ceasing trading

If you are aware that there is little possibility of repaying debts then you should case trading immediately. If you continue to use credit services in the knowledge that there is no prospect of settling the accounts then this will be considered wrongful trading.

Take professional advice

If as soon as you realise there is a serious issue you seek professional advice from insolvency specialists then the court will take this into favourable consideration.

Avoiding director disqualification

The ramifications of director disqualification are very serious indeed. Not only does it involve a ban from running any company in the UK, directors who have been disqualified are also not permitted to act as school governors or charity trustees and are not allowed to retain membership of professional bodies.

It is therefore crucial to take professional advice as soon as there is even the slightest inkling of financial difficulties within your business. If you are worried about anything, why not talk in the first instance on an informal basis to your bookkeepers? They’ll be able to give you an idea as to whether it’s time to talk to insolvency experts or perhaps look at company rescue solutions.