8 month bench, corporation tax installments due

[junior contractor]

Hi


i have been on bench for past 8 month, my corporation tax was due in summer.
about 13k, spoke to HMRC and they agreed for me to pay in installment of £1300 monthly.

today i phoned them and asked if i can reduce to £500
they took the payment but told me since it will take longer than 12 month to clear the payment
it may not be possible. anyway im waiting for someone from hmrc to call me to discuss.

today having read this page ..

Contractor Doctor: I can’t pay my tax bill to HMRC – what are my options?

"Simister says that the trigger point for insolvency is when the contractor’s limited company cannot realistically repay the debt within 12 months. If this is the case, the solution for most contractors is to undergo a voluntary liquidation. This would involve them agreeing an affordable payment plan to clear their debt to the company, using a licensed insolvency practitioner who the contractor has chosen."

now im concerned about my options. and fear it may all get worse ..

has anyone been in the same situation ? or can advise what i can do to proactively avoid situation getting worse

[kingcook]

The only advice I can offer is this: in the future, don't spend money that isn't yours.

[tractor]

...

The only advice I can offer is this: in the future, don't spend money that isn't yours.

But the OP is still doing that because they think they have 20k in the bank for 'day to day living'.

[PeterF]

Do you have an accountant? If not, get one. If you do, get a different/better one. CT is not profit kicking around in your company a/c, it is not available for the company to pay to you (with the exception of loans and associated constraints). Your company will have been running with a negative balance for some time - wrong on various levels.

Again, get some competent professional advice. Hope it works out for you.

Pete.

[jmo21]

Hi


i have been on bench for past 8 month, my corporation tax was due in summer.
about 13k, spoke to HMRC and they agreed for me to pay in installment of £1300 monthly.

today i phoned them and asked if i can reduce to £500
they took the payment but told me since it will take longer than 12 month to clear the payment
it may not be possible. anyway im waiting for someone from hmrc to call me to discuss.

today having read this page ..

Contractor Doctor: I can’t pay my tax bill to HMRC – what are my options?

"Simister says that the trigger point for insolvency is when the contractor’s limited company cannot realistically repay the debt within 12 months. If this is the case, the solution for most contractors is to undergo a voluntary liquidation. This would involve them agreeing an affordable payment plan to clear their debt to the company, using a licensed insolvency practitioner who the contractor has chosen."

now im concerned about my options. and fear it may all get worse ..

has anyone been in the same situation ? or can advise what i can do to proactively avoid situation getting worse

I'm not sure contracting is for you.

Have you tried to get permie roles?

[TheFaQQer]

Combining this thread with your other thread about JSA, there seems to be a simple solution here.

1) Recall the directors loan that is outstanding, which gives the company £5k to start to repay the money you owe to HMRC. This may cause some personal inconvenience in that your bank balance will drop to a mere £15k rather than the current £20k but I'm sure you'll manage somehow.

2) Repay as much of the debt to HMRC as you can now. Assuming you made three payments since the summer, your current HMRC debt is £9100. Repay the £5k from the directors loan account and you are down to owing £4100, which is then easily managed in eight / nine months by paying £500 a month.

3) Don't do it again.

I may be missing something, but the figures you have mentioned in your two posts combine to show how you can and should solve the mess.

[The Spartan]

The only advice I can offer is this: in the future, don't spend money that isn't yours.

Exactly, this situation is all of your own doing I wouldn't expect too much sympathy from HMRC

[Maslins]

Do you have an accountant? If not, get one. If you do, get a different/better one. CT is not profit kicking around in your company a/c, it is not available for the company to pay to you (with the exception of loans and associated constraints). Your company will have been running with a negative balance for some time - wrong on various levels.

Agree with the latter part of the above. Re the first part, you can lead a horse to water but you can't make it drink. We've got a fair few clients in a pickle because they've withdrawn way too much, and they've been warned plenty of times from early on but ignored us. Possibly because they thought/think they know better, possibly because they (feel they) need the money privately and whilst they know it's wrong it's too easy to take it, possibly a bunch of other reasons.

Other posts in this thread make me think there's more to it than the OP is letting on though...

[northernladuk]

So you've messed up royally and are in some hot water so decide to try and fix it by asking a bunch of strangers on an internet forum? That's gonna sort it.

Other posts in this thread make me think there's more to it than the OP is letting on though...

You mean a lack of an accountant or something more sinister?

[sal]

You mean a lack of an accountant or something more sinister?

Maslins is probably speaking about this:

situation is i have 40k outstanding debt ( corporation tax 12k, loan,and credit cards)
in my bank account i have 20k ( 15k borrowed from family and director loan from my limited company) which i have reserved for day to day living expenses and paying various debt installments.

This is what happens, when everyone and their dog deiced to start contracting