Background
Mr K was the director of a family run restaurant operating under a well-known franchise in Surrey. The business grew steadily before the pandemic, employing nine staff and building a loyal customer base.
Lockdowns caused turnover to collapse. The company took a Bounce Back Loan, deferred VAT and entered Time to Pay arrangements. Rising energy costs and wages later made recovery impossible.
By early 2025 HM Revenue and Customs issued a statutory demand for £265,000 covering VAT, PAYE, Corporation Tax and penalties. The landlord pursued rent arrears and dilapidations, while the franchisor threatened to seize equipment. Mr K had personally guaranteed the lease and held an overdrawn directors loan account of £53,650.
The Situation
When Mr K contacted Navigate Business Recovery Limited, the business faced:
HM Revenue and Customs arrears of £265,000
Trade creditors of £67,500
Rent and dilapidations claims of £89,000
Threatened asset seizure by the franchisor
Nine employees at risk
Personal exposure through guarantees and loan accounts
A winding up petition would have frozen the company bank account and forced closure.
NBR Intervention
We immediately contacted HM Revenue and Customs, the landlord and the franchisor requesting a pause in enforcement.
A financial review and cashflow forecast demonstrated that the restaurant could survive if arrears were restructured.
We negotiated with the landlord to suspend action and reduced dilapidations by £24,000.
We secured agreement that kitchen equipment belonged to the company.
We challenged penalties and obtained a £38,000 reduction, followed by a twelve month Time to Pay arrangement.
Outcome
No winding up petition was issued.
£38,000 in penalties were cancelled.
Landlord and franchisor enforcement was stopped.
Nine jobs were saved.
Mr K avoided personal bankruptcy and retained control of the business.
Director Guidance
Unpaid VAT and PAYE are treated seriously and often trigger rapid escalation.
Statutory demands normally allow 21 days to respond before a winding up petition may follow.
Early coordinated action across creditors is critical.
Disclaimer
This article is for general guidance only and does not constitute legal advice. Each case depends on its own facts and circumstances and professional advice should always be sought before taking any action. Navigate Business Recovery Limited does not accept responsibility for any loss arising from reliance on this information.
For confidential advice please contact:
Vee Bharkhada
Navigate Business Recovery Limited
Email vee@navigatebr.com
Office 0330 236 9937
Mobile 07961 116321
Leave a Reply