CT500 LTD

1. Risk Rating: HIGH

Justification: CT500 Ltd is balance sheet insolvent, with net liabilities exceeding £301,000 as of the latest reporting period (Year Ending 31 March 2026). The company’s ongoing solvency is entirely dependent on the forbearance of its primary creditor (the director), and current liabilities vastly exceed current assets without this related-party debt. The lack of visibility over trading profitability further exacerbates the financial uncertainty.

2. Key Concerns

• Balance Sheet Insolvency: The company has negative shareholders' funds of £-301,220. Total liabilities (£337,529) significantly exceed total assets (£36,264). Under standard statutory tests, the company is insolvent, meaning it could face compulsory winding up if a creditor demanded payment and the company could not meet the obligation.
• Extreme Liquidity Dependency: Current liabilities (£337,529) dwarf current assets (£36,264), resulting in net current liabilities of over £301,000. This presents a severe liquidity risk. However, it is critical to note that £335,600 of these current liabilities are classified as "Other creditors," which almost entirely represents the director's loan. The company survives solely because the director has not demanded repayment.
• Lack of Profitability Visibility: As a small entity, the company has filleted its accounts and omitted the Profit & Loss statement. While the balance sheet shows accumulated losses growing from £-297,681 to £-301,320, it is impossible to determine if the core trading operations (sale of used cars) are generating a gross profit or if the ongoing operational costs are eroding the business further.

3. Positive Indicators

• Director Support and Forbearance: The accounts explicitly state that the director "continues to support the company as its main creditor and asserts that he will not draw on his Director's loan unless the company can afford for him to do so." This formal commitment provides a degree of going concern viability that the raw numbers alone do not show.
• Improved Cash Position: Cash at bank increased significantly from £770 in 2025 to £10,517 in 2026. This suggests an injection of funds or a successful realization of assets, improving the immediate operational liquidity.
• Regulatory Compliance: The company is active, and its accounts and confirmation statements are filed and up to date, with no overdue filings noted. This indicates that despite the financial distress, administrative and statutory duties are being met.

4. Due Diligence Notes

• Nature of the Director's Loan: Investigation is required to determine the composition of the £335,600 "Other creditors." It is necessary to establish whether this represents injected capital (cash the director has loaned to fund operations) or unpaid director remuneration/dividends that have been credited to the director's loan account.
• Stock Realizability: Stock (used cars) increased from £9,100 to £25,028. Given the volatility and potential depreciation in used car valuations, it is crucial to verify the "lower of cost and net realisable value" accounting policy to ensure the stock is not overstated.
• Trade Creditor Emergence: The 2025 accounts showed zero trade creditors, but the 2026 accounts show £1,791. While small, this indicates the company may be starting to utilize external trade credit, which could signal a shift in how the business is funded if the director's loan facility is maxed out.