As the sole director of a limited company aged 49 I am considering an IVA. I will only pay myself a modest wage whilst in the IVA but my question is - Would my company be able to pay into a pension on my behalf to reduce its corporation tax and can the creditors touch this money or prevent the company making whatever payments it wishes to make.
Your creditors will expect the company to pay you a fair wage --- not an artificially minimised figure and the company will be expected to keep back only enough capital to meet its usual running costs. I doubt they will allow pension payments.
The creditors do not have the power, in an IVA, to force the company do to anything, other than contractual obligations entered into. However the ultimate sanction ( power, if you like) the creditors hold is the discretion to simply refuse to agree to enter the agreement in the first place, or to bring about its failure should the terms not be adhered to or full disclosure found to be lacking.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
My company only turned over £50k last year and I only paid myself a minimum salary of just under £7k. This year I expect turnover to be around £100k and would look to pay myself a salary of around £22k. The company does not currently pay into any pension on my behalf but that is an option I was looking to do. If the company start paying into it and not myself personally after the IVA has been set up, how would they be able to reject the IVA if I declare it?
My understanding is that pensions are not in the reach of creditors unless I were to draw down a lump sum whilst still in the IVA.
Sometimes the creditors will require monies paid into pension funds, over and above minimum contributions detailed in employment conditions, to be diverted towards debt repayment instead. They also take the time current pension arrangements have been running and are more ameniable to leaving long running schemes untouched but insisting new schemes be suspended during the IVA. At the end of the day it all falls to the bottom line : The dividend.
Creditors do not need to justify their decision to accept or reject. If they feel they deserve the money more than a pension fund might they could simply say "No" to the IVA and, if they have enough voting power (more than 25%, by debt value, of those that actually vote) they could swing a rejection.
All that said, they may just let it go.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I was looking to have the company contribute into the pension pot after they had already said yes. I'm not sure they could then ask for that to be diverted or change their mind about the IVA once agreed and setup. I would not be making any voluntary contributions myself.
