BT Services early termination charge - how to avoid?
Discussion
As many of you guys many know, BT give you a minimum 24 month contract for a business. I pay £55 per month for Broadband and my Telephone line and I am happy enough with their service but I have decided to stop trading to focus on other ventures and give my family more time.
I have notified Companies House of this and the business is in the process of being struck off (and with it the bank accounts etc will be subsequently closed also).
Now, I have told BT of this and they have sent me an Early Termination bill totalling £651 + VAT to close it. Now, this seems quite high for just a termination fee and unfair (though understandable on their part) given that no more trading will happen and there is no more use for their services so what is there to charge for? I understand they want a return on their products and services but is there a way to avoid paying this entirely or reducing it significantly?
Can I liquidate the business and show there are no assets (which is what the lady over the phone subtly hinted at) or is there a more ethical way of going about it?
Regards
Scherm
I have notified Companies House of this and the business is in the process of being struck off (and with it the bank accounts etc will be subsequently closed also).
Now, I have told BT of this and they have sent me an Early Termination bill totalling £651 + VAT to close it. Now, this seems quite high for just a termination fee and unfair (though understandable on their part) given that no more trading will happen and there is no more use for their services so what is there to charge for? I understand they want a return on their products and services but is there a way to avoid paying this entirely or reducing it significantly?
Can I liquidate the business and show there are no assets (which is what the lady over the phone subtly hinted at) or is there a more ethical way of going about it?
Regards
Scherm
Edited by Schermerhorn on Tuesday 28th March 12:16
Mr Overheads said:
If the Ltd Co entity no longer exists then they have no one to chase for the debt. Cancel the DD and ignore the bill.
Is this method a dead cert?It will take 2 months for my company to be closed down at CH and BT may give me 28 days to pay the bill from the end of the notification period (21st April 2017 they said). I am happy to pay the April bill but beyond that I really don't want to pay anything extra.
Imagine for a second that the contract is with you personally. And presume you have no assets to your name, no house, no car, no cash in the bank etc. You then drop dead tomorrow. So you as an entity cease to exist. Who would BT chase for payment, there is no estate to chase and you don't exist.
So an asset less folded company is the same.
So an asset less folded company is the same.
Mr Overheads said:
Imagine for a second that the contract is with you personally. And presume you have no assets to your name, no house, no car, no cash in the bank etc. You then drop dead tomorrow. So you as an entity cease to exist. Who would BT chase for payment, there is no estate to chase and you don't exist.
So an asset less folded company is the same.
But surely even if the company folded, they would just check Companies House records and see that I am the (ex) director of the firm and just come knocking on my door where I reside?So an asset less folded company is the same.
Schermerhorn said:
Mr Overheads said:
Imagine for a second that the contract is with you personally. And presume you have no assets to your name, no house, no car, no cash in the bank etc. You then drop dead tomorrow. So you as an entity cease to exist. Who would BT chase for payment, there is no estate to chase and you don't exist.
So an asset less folded company is the same.
But surely even if the company folded, they would just check Companies House records and see that I am the (ex) director of the firm and just come knocking on my door where I reside?So an asset less folded company is the same.
Different opinions which is quite interesting.
When I terminated my British Gas supply I put it back onto the name of the landlord and paid £0.00.
This is interesting and I need some more consistent answers before deciding on which course of action to take. The BT Accounts manager lady's were quite interesting though, 'if you have no assets and have liquidated the company BT cannot come after you'.
PS the original contract started Decemmber 2015. We moved premises in September 2016 and carried on with the same number but BT applied another 24 month contract.
Is there any maneovurability here?
When I terminated my British Gas supply I put it back onto the name of the landlord and paid £0.00.
This is interesting and I need some more consistent answers before deciding on which course of action to take. The BT Accounts manager lady's were quite interesting though, 'if you have no assets and have liquidated the company BT cannot come after you'.
PS the original contract started Decemmber 2015. We moved premises in September 2016 and carried on with the same number but BT applied another 24 month contract.
Is there any maneovurability here?
When I renegotiated my contract with BT Business (landline and broadband used for business at my home address) they automatically put me on a new two-year contract. I complained about this and managed to get them to put a note on my Customer record; saying that I "could not be held to term". I have checked this with several BT representatives subsequently and they all confirmed it.
So try this method.
So try this method.
Schermerhorn said:
Different opinions which is quite interesting.
When I terminated my British Gas supply I put it back onto the name of the landlord and paid £0.00.
Utilities are different, there has to be a customer for gas and electric, there does not for a BT contract.When I terminated my British Gas supply I put it back onto the name of the landlord and paid £0.00.
You need to talk to your accountant about the voluntary winding up. All creditors need to be satisfied before the winding up.
KevinCamaroSS said:
Schermerhorn said:
Different opinions which is quite interesting.
When I terminated my British Gas supply I put it back onto the name of the landlord and paid £0.00.
Utilities are different, there has to be a customer for gas and electric, there does not for a BT contract.When I terminated my British Gas supply I put it back onto the name of the landlord and paid £0.00.
You need to talk to your accountant about the voluntary winding up. All creditors need to be satisfied before the winding up.
BT's contracts are clear. There is no tried an tested method of getting them to waive their contractual rights (that you agreed to). Many have tried.
If you catch someone sympathetic on a good day then of course they can make it go away, but its entirely discretionary.
Steve H said:
Schermerhorn said:
Can I liquidate the business and show there are no assets (which is what the lady over the phone subtly hinted at) or is there a more ethical way of going about it?
You're dealing with BT, don't worry about ethics because they won't.Surprising (mis)information given here. There is more than one way to "close" a company, though all end up at the same point, the company is dissolved and struck off the companies house register.
The most common, and expensive route, is liquidation. This can either be voluntary, brought about by the members of a company, and compulsory, brought about by a creditor or creditors. A licensed insolvency practitioner is appointed (fees start at £5K), who contacts all debtors and creditors of the company, and liquidates the assets. If as a result of this the assets are less than the debts, as is common in compulsory liquidations, then the assets are evenly distributed amongst the creditors. If the assets exceed the debts, then the remaining cash is distributed amongst the shareholders, after the insolvency practitioners fees of course. Once all this is down, the IP applies to Companies House to have the company stuck off, and it no longer exists.
Another route, and I think the one followed by the OP, is simply to go straight to dissolution. It only really works if the company has no assets to distribute. If the company has ceased trading for 3 months or more, then it can write to all creditors stating that it has ceased trading, that it has no assets to pay for an IP, and invite the creditors to pay for a compulsory liquidation. They will not want to as it will cost them £5K plus and they won't see a return. Wait another 3 months then apply to Companies House for the company to be struck off. Any of the creditors can object to this, if they feel they want to pursue the company for the debt. But Companies House won't allow them to keep doing this without pursuing liquidation. So, the company is struck off, and any debts die with it.
To the OP, as long as you signed no personal guarantee, which I'm willing to bet you didn't for a small contract with BT, then you can just ignore them. The debt is with the company, not you, and will die with the company, which is what the debt collection lady at BT was hinting at I think. You, as a director, have no liability for company debts, that is the whole point of a Limited Company.
Of course, if you have done something very naughty that is discovered, then the company can be re-instated for up to 20 years (I think 20?) by a court, or a court can choose to lift the corporate veil and make you personally liable. Both are very rare and require exceptional circumstances.
The most common, and expensive route, is liquidation. This can either be voluntary, brought about by the members of a company, and compulsory, brought about by a creditor or creditors. A licensed insolvency practitioner is appointed (fees start at £5K), who contacts all debtors and creditors of the company, and liquidates the assets. If as a result of this the assets are less than the debts, as is common in compulsory liquidations, then the assets are evenly distributed amongst the creditors. If the assets exceed the debts, then the remaining cash is distributed amongst the shareholders, after the insolvency practitioners fees of course. Once all this is down, the IP applies to Companies House to have the company stuck off, and it no longer exists.
Another route, and I think the one followed by the OP, is simply to go straight to dissolution. It only really works if the company has no assets to distribute. If the company has ceased trading for 3 months or more, then it can write to all creditors stating that it has ceased trading, that it has no assets to pay for an IP, and invite the creditors to pay for a compulsory liquidation. They will not want to as it will cost them £5K plus and they won't see a return. Wait another 3 months then apply to Companies House for the company to be struck off. Any of the creditors can object to this, if they feel they want to pursue the company for the debt. But Companies House won't allow them to keep doing this without pursuing liquidation. So, the company is struck off, and any debts die with it.
To the OP, as long as you signed no personal guarantee, which I'm willing to bet you didn't for a small contract with BT, then you can just ignore them. The debt is with the company, not you, and will die with the company, which is what the debt collection lady at BT was hinting at I think. You, as a director, have no liability for company debts, that is the whole point of a Limited Company.
Of course, if you have done something very naughty that is discovered, then the company can be re-instated for up to 20 years (I think 20?) by a court, or a court can choose to lift the corporate veil and make you personally liable. Both are very rare and require exceptional circumstances.
Wombat3 said:
Steve H said:
Schermerhorn said:
Can I liquidate the business and show there are no assets (which is what the lady over the phone subtly hinted at) or is there a more ethical way of going about it?
You're dealing with BT, don't worry about ethics because they won't.Or them expecting full payment for a service that they ultimately will not need to provide with no discount or allowance for the extra profit they will make?
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The fact that you answered suggest you have both.So, what regulations mean they have to use a two year contract?
And what issue am I missing? They agreed to provide a service for two years, now that they won't have to provide the service they would still like to be paid in full as if they had and pocket the additional profit.
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