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Ex contractor, now perm really needs advice..

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    Ex contractor, now perm really needs advice..

    I contracted for around 10 years, always up to date on corp tax etc. June 2018 my 4 year contract ended. I stayed in a service role, 2 days a month, but couldnt find anything long tem, until eventually being taking a perm role in March 2019.

    Fast forward 18 months later. I kept my ltd active, have paid my accountant monthly, always with intention of going back when market picks up. Long and short, ive been landed with a bill of £25k from HMRC, backdated. I have no means of paying this. I have about £400 in my ltd bank acct. While my salary is ok, i just dont have that money, or ability to raise 25k outside of high interest personal loans.

    So, my wife is furloghed and we are both worried beyond belief that we will have to sell our house.

    Just need to ask, any advice ? Anyone had similar experience ?

    #2
    Originally posted by DavidP View Post
    I have about £400 in my ltd bank acct.
    Just give them that and tell them about what the limited bit means in your limited company.

    Or, if you’re feeling frisky, apply for one of those 50k scrounger loans first.

    Comment


      #3
      What is the bill for? Unpaid corp tax or unpaid VAT or unpaid NI ??
      Vote Corbyn ! Save this country !

      Comment


        #4
        So there is delayed submission of accts for £700, £4700 in corp tax, that includes s455 tax (?)and remainder is 18k directors loan

        Excuse my ignorance, but this is all something ive not really understood and took the accts word for.

        Comment


          #5
          I suppose my question is, what is my personal liability and can i, as a last resort, walk away from this and my personal credit rating not be affected ?

          Comment


            #6
            Originally posted by DavidP View Post
            I contracted for around 10 years, always up to date on corp tax etc. June 2018 my 4 year contract ended. I stayed in a service role, 2 days a month, but couldnt find anything long tem, until eventually being taking a perm role in March 2019.

            Fast forward 18 months later. I kept my ltd active, have paid my accountant monthly, always with intention of going back when market picks up. Long and short, ive been landed with a bill of £25k from HMRC, backdated. I have no means of paying this. I have about £400 in my ltd bank acct. While my salary is ok, i just dont have that money, or ability to raise 25k outside of high interest personal loans.

            So, my wife is furloghed and we are both worried beyond belief that we will have to sell our house.

            Just need to ask, any advice ? Anyone had similar experience ?
            Use the £400 to buy some good accountancy advice either with you current accountant or a new accountant. Have HMRC billed you or billed the company? I have a feeling this is a try-on by HMRC.

            Stop worrying, at worse HMRC would put a charge on your property if they consider it a personal debt and not a company debt and highly doubtful if they forced a sale.

            You can PM me if you want
            "A people that elect corrupt politicians, imposters, thieves and traitors are not victims, but accomplices," George Orwell

            Comment


              #7
              Thanks Paddy. Doubt we're the only ones going through this at the moment. Is a worry though.

              Comment


                #8
                Originally posted by DavidP View Post
                So there is delayed submission of accts for £700, £4700 in corp tax, that includes s455 tax (?)and remainder is 18k directors loan

                Excuse my ignorance, but this is all something ive not really understood and took the accts word for.
                S455 is the 25% holding fee tax from having an outstanding directors loan (which would be £4500 given the size of the loan).

                But as a director of a small company how do you have a director loan of £18,000 surely it's profit you could have taken as dividends?
                Last edited by eek; 5 November 2020, 07:59.
                merely at clientco for the entertainment

                Comment


                  #9
                  Originally posted by eek View Post
                  S455 is the 25% holding fee tax from having an outstanding directors loan (which would be £4500 given the size of the loan).

                  But as a director of a small company how do you have a director loan of £18,000 surely it's profit you could have taken as dividends?
                  This is the crux of it.

                  David your accountant has screwed you over if he hadn't warned you about s455 tax on directors loans. You'll need to pay the £18k back to the company and then reclaim the £4700 (or £4500 i.e. 25%) s455 tax that HMRC are charging you.

                  I don't see how your tax bill is £25k though. You could pay the £700 and the £4700 and you're done with most of it. You'd have to ask the accountant (a good one) what is left to do with the £18k - but as you've paid the s455 you won't have much more to pay, if anything.

                  If you can't afford to do this then consider taking a personal loan (or re-mortgage) for a short time to clear up the accounts.

                  I really don't see how you can't pay the tax due. You'll end up in heap of mess with HMRC if you try to evade the tax.

                  Comment


                    #10
                    Thinking about it I suspect the issue is that the loan is outstanding and needs to be repaid.

                    To do that David is going to have to borrow the money from somewhere personally, repay the loan, reclaim the 25% S455 back from HMRC (but some interest will still need to be paid which is why I suspect it's £4700 rather than £4500). Then when that demand is removed (or paid and reclaimed) he can extract the £18,000 back via dividends and close the company.

                    David your accountant does seem to have done a very bad job at explaining things to you so get him to fix this mess or find another one as you do need to get this fixed.
                    Last edited by eek; 5 November 2020, 09:11.
                    merely at clientco for the entertainment

                    Comment

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