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I am the owner of a mid-sized manufacturing business. A supplier of mine has just gone into administration — they owe me a significant amount of money as a number of the goods which they supplied me with are faulty. Is there anything I can do to recover the sums due? I paid for the goods upfront.
Jessica Williams, managing associate at Mishcon de Reya, says that when a supplier enters administration, the knock-on effect to your business can be significant. You may find that you need to act fast to minimise the impact on your own business, recovering (where possible) any money owed to you from the company in administration as swiftly as possible.
A good place to start is to make contact with the administrators. You will find their details listed in the Companies House filings for the company. Establishing communications with the administrators promptly will allow you to protect your interest in the outcome of the administration (and, specifically, your right to be paid a dividend, if there is one) as much as possible. You should not assume that, because the directors of the company knew about your claim, the administrators will have been informed. Once you are noted by the administrators as a potential creditor, you will be entitled to be updated on the progress of the administration.
Then you can turn your attention to the proof of debt. This is a document by which you submit the details of your claim, along with supporting evidence, to the administrators. Completing this step will allow the administrators formally to accept your claim, ensuring you are registered as a creditor against the company, and that you may participate in any subsequent distribution of assets. However, you will need to ensure that you provide sufficient information and detail to persuade the administrators that you have a genuine claim.
To demonstrate that this is the case, you should first look at any contractual documentation which sets out your right to payment. Recent case law has given a stark reminder that creditors should check whether there are any clauses in the contract which put a time limitation on your claim. The administration of a debtor does not automatically “stop the clock” on a contractual claim. So if your contract says that a claim for unpaid invoices or faulty goods must be made within 12 months, for example, you will need to ensure that your claim is put to the administrators and, importantly, acknowledged by them within that time period, or you will lose out.
If the administrators do not want to acknowledge your claim, you may need to bring legal proceedings to prove it. However, where the defendant is in administration you will need the permission of the administrators or the court to do so. This can take further time, and so it may be advisable to enter into a “standstill agreement”, which extends the period for a claim to be made, with them whilst you resolve these issues. Alternatively, you may need to issue a protective claim against the company to ensure that you do not miss out.
Should I give my children their inheritance early?
My children are grown up and I want to give them their inheritance early, but I’m worried that they will be left to deal with the tax burden and other costs. What should I do?
Will Stevens, head of wealth planning at Killik & Co, says it’s understandable that you’re considering this. However, you are right to be mindful of the potential tax implications and costs.
Inheritance tax is paid on estates that exceed a £325,000 nil-rate band, which can rise to £500,000 if a property is passed on. The tax-free allowance rises to a combined total of up to £1mn for married couples and civil partners.
From April 2027, pensions will be included inside the estate for the first time and therefore the number of people liable to paying inheritance tax will rise further. Farms and privately owned businesses were also previously exempt, but this will also come into the scope from April 2026.
In the UK, most lifetime gifts are potentially subject to IHT if you pass away within seven years of making the gift. This is what is known as the “potentially exempt transfer” (PET) rule. If you survive for seven years after making the gift, it generally falls outside of your taxable estate. However, there are exemptions and reliefs that can significantly reduce or eliminate this tax liability.
Our next question
I have heard from another family member that my mother, with whom I have a strained relationship, has recently changed her will and has left me out and is leaving everything to my three brothers instead at their suggestion. Is there anything I can do to challenge this now?
There are also annual exemptions (£3,000 per tax year) and small gift exemptions (£250 per person per tax year) that can be used immediately without IHT implications, and there are other allowances such as regular gifting of surplus income. Beyond IHT, there might be other considerations, such as the recipients’ tax position and how they manage the proceeds they are given, any capital gains tax that may be payable by you if the assets that have increased in value since you acquired them, and your children’s own circumstances.
However, you need to assess your current and projected financial situation to ensure you remain comfortable. It’s crucial to consider your own financial security first, ensuring that making these gifts doesn’t now compromise your own affordability in the future, particularly with rising needs for care costs in later life, which can be expensive.
Before proceeding with any major financial decisions you should explore the potential tax implications, discuss suitable strategies for mitigating any burdens, and ensure this decision aligns with your overall financial plan and wishes — as well as those of your beneficiaries.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to money@ft.com.
