Not paid HMRC or done any paperwork.. how screwed am I?

[mreades]

I've just looked at the business account. I've taken around $16000 out without any paperwork (that's pounds, I'm using a foreign keyboard as I'm in Asia at the moment).

[LisaContractorUmbrella]

OK. Just in case. A sockie is an existing poster who assumes a new identity and then winds everyone up by posting something that will provoke a reaction.

If this is a real situation find yourself a good contractor accountant and throw themselves on their mercy; I wouldn't think they're fees will be cheap to sort out this mess. Then pray that you haven't spent monies due to HMRC; if you have you will also need to throw yourself on their mercy. If you are in full time employment now they may claw back monies owed via your tax code

[mreades]

Am I being stupid for thinking the mess is not that big? Either call it all a directors loan or salary payments (which will attract tax + NI) and do all the missing end of year stuff and VAT paperwork then pay the fines / what is owed?

I've taken 16k out without paperwork and have around 32k in the account. Surely that will cover me and I'll still get a good amount of that 32k to take home?

[tractor]

...

Am I being stupid for thinking the mess is not that big? Either call it all a directors loan or salary payments (which will attract tax + NI) and do all the missing end of year stuff and VAT paperwork then pay the fines / what is owed?

I've taken 16k out without paperwork and have around 32k in the account. Surely that will cover me and I'll still get a good amount of that 32k to take home?

Do not make any assumptions.


If you have 32k left and it is all VATable income, then your VAT bill will be a minimum of £8k. Given that your turnover is likely to have been far higher and if you have paid no VAT at all but you have charged it, your VAT bill will be commensurately higher.

In order to determine an accurate figure for Corporation Tax, you will need to have your accounts finalised properly by an accountant. This may be extremely difficult if you have not been keeping records. Clearly, you do not have the knowledge to do this yourself.

This will take into account all your transgressions and allow the accountant to then determine both your company and personal liability. These then have to be reported to HMRC. When they see how late you are with all this, they will decide whether to investigate. Once you know these two figures, you can calculate what is left from the balance of your account.

Bear in mind that if you are in current full time employment, any further dividends to distribute the balance of your company profit may well attract tax at a higher rate than basic. I think the marginal rate is 32.5% Please accountants , correct this if I am wrong.

The best recommendation is not to pay or spend any more of the companies money until you sort it all out.

[TheFaQQer]

Am I being stupid for thinking the mess is not that big? Either call it all a directors loan or salary payments (which will attract tax + NI) and do all the missing end of year stuff and VAT paperwork then pay the fines / what is owed?

I've taken 16k out without paperwork and have around 32k in the account. Surely that will cover me and I'll still get a good amount of that 32k to take home?

So, you invoiced £48k

If you were on FRS VAT then £7k goes to the VAT man, so leaves you with £41k

20% goes in corporation tax, so leaves you with £33k. You've already taken £16k, so that leaves you with £17k to pay any other taxes and fines due. There will be a few of them kicking around.

If the money that you've taken is seen as salary, then you will have PAYE and NI to pay on that. An accountant will also need to look at what you have claimed as expenses and whether they are valid expenses which can be offset, or whether they are benefits in kind which need to be declared.

Factor in the accountancy costs and costs to close the company down, and there should be some money left over for you to take. Bear in mind that how you take the money may incur some tax as well.

Good luck.

[northernladuk]

I've just looked at the business account. I've taken around $16000 out without any paperwork (that's pounds, I'm using a foreign keyboard as I'm in Asia at the moment).

Best place to be in your predicament IMO.

[mreades]

I've actually got reasonably good records including all incomings and outgoing.

Also, I haven't earned any money within the UK since my last contracting client. I'm in full time employment abroad now.

[northernladuk]

Am I being stupid for thinking the mess is not that big? Either call it all a directors loan or salary payments (which will attract tax + NI) and do all the missing end of year stuff and VAT paperwork then pay the fines / what is owed?

I've taken 16k out without paperwork and have around 32k in the account. Surely that will cover me and I'll still get a good amount of that 32k to take home?

Bearing in mind the level of stupidity getting yourself in this mess do you really think it's wise to add another layer of stupidity over the top of it by thinking you are going to have a smooth ride? Belt and braces approach is needed now, not more slap dash assumptions.

[tractor]

...

I've actually got reasonably good records including all incomings and outgoing.

Also, I haven't earned any money within the UK since my last contracting client. I'm in full time employment abroad now.

So you already know how much VAT you are liable for. How much of the remaining 32k does that eat up?

[mudskipper]

I'm assuming you're registered for VAT?