Limited Liability. More Important Than Tax Advantages?
19/04/2016 | Insolvency
LIMITED LIABILITY. MORE IMPORTANT THAN TAX ADVANTAGES?
By Tim Corfield
Definitely, I’d say so!
Should a taxi driver (without any employees) be operating within a limited company or be self- employed? Turnover around £30,000 profits around £20,000.
Arnold was the particular taxi driver who took a fare for a day trip for four people. Unfortunately, a vehicle defect caused a minor accident (no other car involved). All four passengers took legal advice off a specialist injury firm of solicitors and sued for injuries sustained from the accident, an accumulated total in the region of £75,000. Arnold's insurance refused to settle based on a technicality. Even if he won Arnold's legal fees were likely to be at least £25,000.
Arnold was 62 and had been married to Betty for 35 years. They had worked hard throughout their lives and just paid off their mortgage on their home which was worth around £175,000.
So was Arnold trading through a limited company or did he lose his house?
Phew! I'm pleased to say he traded through a limited company which entered liquidation a few months ago. Arnold and Betty had a few sleepless nights but not as many as they might have had!
So beware of the risks of a sole trader - even for the most simplest of businesses.
So, if you'd like to chat through any potential issues over the telephone or have a meeting either with or without your client to discuss a case then call us, we would be happy to help.
Griffin and King are leading Insolvency Practitioners in Shropshire offering advice and solutions for businesses in financial difficulty. Contact us now - the sooner you do the sooner we can help.