Quick legal question...

[Dirty Boy]

Company A owes company B £100,000
Company B owes company A £200,000

Company A is overdue to pay Company B, therefore when remitting, Company B contra'd the amount outstanding and paid (within Company A's terms) £100,000 (The £200k they owed, less the £100k they were owed)

Can they do this?

Cheers
DB

[rude-boy]

Depends on if the TOB allows for offset, or more importantly, does not preclude it.

[randomman]

Not really. Assuming the debts were acquired independantly.

I wonder if the taxman would have anything to say on it too?

[Dirty Boy]

rude-boy said:

Depends on if the TOB allows for offset, or more importantly, does not preclude it.

Okay, that makes sense, I doubt it's included, but I very much doubt it's precluded.

It's a fairly substantial sum, owed for over 2 months now, they're notoriously poor payers, and given the current climate, we want our clients to protect themselves as much as possible.

Cheers.

[FPC]

Not much you can do about it. If you sue for the £100k owed, they can just counterclaim the same amount.

[Dirty Boy]

randomman said:

Not really. Assuming the debts were acquired independantly.

Why?

randomman said:

I wonder if the taxman would have anything to say on it too?

Why?

[Dirty Boy]

FPC said:

Not much you can do about it. If you sue for the £100k owed, they can just counterclaim the same amount.

Well that's precisely why I think they can do it.

If my client pays them the £100k they owe, net of the amount they owe them, there's a counterclaim eitherway, nobody would benefit.

The only reason I can see this being a problem is if the company are struggling cash flow wise, and that's why they are holding off payment.

My client is paying them well within their 30 day terms and conditions.

[MitchT]

Dirty Boy said:

randomman said:

I wonder if the taxman would have anything to say on it too?

Why?

Possibly because they're only getting tax for one transfer of £100k instead of one transfer of £200k and one transfer of £100k. You might be able to transfer £100k one way instead of £200k one way and £100k the other, but I would imagine the tax due on both transfers would have to be paid.

[Dirty Boy]

MitchT said:

Dirty Boy said:

randomman said:

I wonder if the taxman would have anything to say on it too?

Why?

Possibly because they're only getting tax for one transfer of £100k instead of one transfer of £200k and one transfer of £100k. You might be able to transfer £100k one way instead of £200k one way and £100k the other, but I would imagine the tax due on both transfers would have to be paid.

The points of sale have already been made.

[rude-boy]

The bottome line is that the two need to talk to each other and sort it out between them but if it were to go to court then the point the other poster made about counter claims is valid.

[rude-boy]

As an aside what is the trading relationship? If i were the one owed the greater ammount i would just put the other company on stop unless they agreed to seting off the £100k against the outstanding amount and provided details of how and when they were going to pay the remainder off.

At the minute it seems to me it is still in the 'business' world, wheel, deal and get it done, rather than the legal field. Certainly I would not be setting off without agreement, how you get that agreement is down to the negotiation.

As for any tax isues i'll leave those to you old boy

[Dirty Boy]

rude-boy said:

If i were the one owed the greater ammount i would just put the other company on stop unless they agreed to seting off the £100k against the outstanding amount and provided details of how and when they were going to pay the remainder off.

I've suggested that.

rude-boy said:

At the minute it seems to me it is still in the 'business' world, wheel, deal and get it done, rather than the legal field. Certainly I would not be setting off without agreement, how you get that agreement is down to the negotiation.

We will contact them once someone more senior is available on their side. It's notoriously difficult to get anyone other than a monkey to talk to when dealing with large PLCs.

rude-boy said:

As for any tax isues i'll leave those to you old boy

Thanks, nice of people who haven't got the first idea of what they're talking about, telling me what can and can't be done.

[rude-boy]

Dirty Boy said:

rude-boy said:

As for any tax isues I'll leave those to you old boy

Thanks, nice of people who haven't got the first idea of what they're talking about, telling me what can and can't be done.

I see you've spoken HMRC's helpless line then