Brendan
Yes, your interpretation is correct.
The issue is that some directors believe that they have no liability, as they trading a limited liability company, However, Section 997A pierces that veil.
Warehousing Revenue debt sounds very attractive to an optimistic entrepreneur. However, For some businesses, such as retail and hospitality, it is challenging to assess future viability post-Covid. For example, in respect of pubs, the consensus view is that when pubs do finally re-open that sales in Year 1 will be 55% -60% of 2019 sales, Year 2 will be 75%, year 3 will be 85%. For some pubs, sales will not get back to full 2019 levels due to a change in consumer habits. Can such pubs re-open, particularly if they were close to break-even in the pre-Covid period? In respect of fashion retail, Covid has propelled us 10 years into the future, and over 50% of such sales are now carried out online. Can such shops re-open?
In summary, there can be a real sting in the tail for directors who optimistically warehouse their company's Revenue debt.
Jim Stafford