Outside IR35 and my Ltd Business

[baggies1]

hi all,
I hope you are well. Im looking for some advise or help.

During the last 6 months ive been unable to secure an outside ir35 position.
Im now having interviews for 3 separate jobs, non of which are outside and one is permanent. Ive been out of contract for over 4 months.

Problem is i have overdue VAT, a huge tax bill in December and a bounce back loan im still paying off. (total circa 20k).

I also hold a lot of personal credit which needs paying off.

My problem is without any income to the ltd business wont be able to catch up on my business bills.
The business has run for over 10 years but i cant see the likelyhood or value of continuing it in the current climate.

Can anyone suggest any thoughts or actions or indeed what i might want to focus on first?
I hate to use the word "bankrupt the business " but the ridiculous IR35 situation seems like its finally come to a head.

[northernladuk]

Do you have an accountant? Looks like you've paid/divi'd money that isn't profit so made illegal dividends or paid from money that isn't yours. Not a nice place to be.

I do have to ask.. How has being out of a gig for 4 months triggered all this? I assume if you mention personal debt you've been having to withdraw every penny even when you were in a gig?

IMO VAT are the people you don't want to mess with, the others 'can' be delayed, put off, negotiated with or have longer timescales for submission. VAT is every three months and it not generally to be messed around with.

That said.... please tell me you've got an accountant and if so go sit down with them. They'll know the order, who to pay, who you can delay and so on.

[jmo21]

hi all,
I hope you are well. Im looking for some advise or help.

During the last 6 months ive been unable to secure an outside ir35 position.
Im now having interviews for 3 separate jobs, non of which are outside and one is permanent. Ive been out of contract for over 4 months.

Problem is i have overdue VAT, a huge tax bill in December and a bounce back loan im still paying off. (total circa 20k).

I also hold a lot of personal credit which needs paying off.

My problem is without any income to the ltd business wont be able to catch up on my business bills.
The business has run for over 10 years but i cant see the likelyhood or value of continuing it in the current climate.

Can anyone suggest any thoughts or actions or indeed what i might want to focus on first?
I hate to use the word "bankrupt the business " but the ridiculous IR35 situation seems like its finally come to a head.

take one of the inside roles, and sort your companies debts instead of trying to claim it is IR35's fault and palm it off on the taxpayer by going bankrupt?

[WTFH]

The VAT, tax bill and bounce back loan are nothing to do with IR35 and everything to do with how your business has been mis-managed. You should never take money out of the company that is owed to the taxman.

I'd hope that you've got an accountant.
My suggestion would be to take a role, get the funds to pay off your business debts then close the company down.

After you've done that, then pay off your personal debts.

[baggies1]

Hi all, thank you for your replies.

I do have an accountant the same ive had since i started 11 years ago. A very reputable one.

Sadly i owe the yearly bill which amounts to 1100 so in my mind a conflict of interest.

I am in no way trying to avoid what i owe. I have been doing that for 11 years and have been very fastidious in doing so. Up to last year i am fully paid up.

What i am trying to be realistic about is that i havent been out of work this long since 2004 (20 years). I am trying to ascertain what is the value of having a ltd business any more?

I have two kids, two dogs and a wife. WE have all worked incredibly have over the years but im am just trying to make the best of a bad situation.

[malvolio]

So in essence the way you have run your business has been somewhat sub-optimal. If nothing else spending VAT and predicted taxes is not the way to do it.

Anyway, you are where you are. There are no easy solutions, but start with the accountant. He may be a little biased by his own debt, but only he will know the legal way to get things paid (and if you go bankrupt, he's at the back of the queue anyway) and only he will really know where the money went and how much is recoverable. But be prepared to loan YourCo some of it as a minimum.

HMRC may offer time to pay, but they won't be too sympathetic if you have taken their money out of your company.

[jamesbrown]

Step 1: don't screw around with VAT. Speak to your accountant about sorting that mess, which may have involved your declaring ultra vires dividends, but you will need to pay that money back in order to pay the VAT. Also, bear in mind that you won't be able to close the company with outstanding tax to pay, so that will need to be paid. The BBL is a different matter.

[JustKeepSwimming]

Also, bear in mind that you won't be able to close the company with outstanding tax to pay, so that will need to be paid. The BBL is a different matter.

I've known it to happen, talking 3-5k though, but this was back during pandemic. I guess HMRC could come knocking but as it was them who initiated the strike off would imply they just accepted it.

I agree with everyone else that this is nothing to do with IR35, the same thing happened in the golden days where many contractors just looked at their business account as a personal account.

What i am trying to be realistic about is that i havent been out of work this long since 2004 (20 years). I am trying to ascertain what is the value of having a ltd business any more?

You won't get much sympathy, you been in back to back work for 20 years, meaning you have seen good and bad markets, yet have consistently lived beyond your means.

Why did you even take a BBL if you have been in contract up to 4 months ago? Limited isn't worth it unless you are consistently working outside.

Anyway as everyone else said, the fact you are in this mess necessities a professional to manage any way out.

[northernladuk]

Sadly i owe the yearly bill which amounts to 1100 so in my mind a conflict of interest..

Maybe it's that type of thinking that got you in this mess. It's not a conflict of interest at all. It's a person that doesn't want to work for free to help a person that can clearly not pay his way.

As with nearly every post like this there are so many unanswered questions it's nigh on impossible to give any advice beyond pay the one person that can get you out of this and let them help you.

[Ketto]

Sounds like you need to get some money coming in pronto.

I’d suggesed taking one of the inside gigs (yes none of us like doing inside, but you can still be taking home 5-8k a month net on a half decent rate). I assume having that sort of money coming in for the past four months would have taken atleast some of the sting out of your current issues. If you have a house, family and big money concerns i don’t think it is wise to sit on the bench for months when you could be earning infinitely more than 95% of the country earns by being pragmatic. I see so many guys with families sitting on the bench for up to a year waiting for outside and saying they are going to the wall financially, when they could have earned £60-£80k net in that time, or put £100k+ in a pension.

You can still look at outside contracts while you are working inside, if you secure one you can then give notice on the inside gig and start the outside one. May involve pissing off agents and clients, but sounds like you are in a hole so there may be no other option.

i’d agree with the advice of others too, get some professional help with this (the accountant will need paying), work out what needs paying asap, what can be delayed, what can be negotiated etc. Then put a plan in place to get it all cleared.

Might take a while, but you will get there. Good luck.