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Wrongful Trading Suspension Ceases: Effective 30th September 2020 - Click for larger version Wrongful Trading Suspension Ceases: Effective 30th September 2020

In order to assist business and the economy, the UK Government was quick with the legislative pen, bringing into force a number of emergency measures designed to protect businesses affected by the impact of the Covid-19 pandemic, and the enforced restrictions on trade and society in general.

Amongst these measures were:

• deferrals of VAT liabilities;

• the ability to make payments over a sustained period of time; and

• protection of businesses from creditor enforcement of certain debts.

This was all in addition to the availability of support grants, bounce back loans and of course, the furlough scheme.

An important measure which was introduced from the perspective of a company director trying to keep the business afloat in such challenging times was the suspension of the provisions prohibiting Wrongful Trading.

Wrongful trading is where director of a company can find him or herself personally liable for debts if they continue to trade when there was no reasonable prospect of the company avoiding insolvent liquidation.

In the middle of an unprecedented pandemic, the decision to suspend this provision was a welcome one and alleviated pressure on directors doing what they could to trade.

It was expected that, given the extension on other measures such as the prevention of creditor petitions for winding up has been extended to 31st December 2020, the suspension of Wrongful Trading would be also.

However, it is important to note that this protection is no longer in force from 30th September 2020.

Directors should take heed of this and be acutely aware of the up to date financial position of the company and the foreseeable financial outlook.

Where you are in any doubt, advice should be sought in order to avoid potential liability.

If you are in any doubt as to your obligations, our team are able to assist with direction and advices.

Alan McKee:

Michael Hankinson:

Last updated: 4.04pm, Thursday 1st October 2020

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