Co-Director - Taking Co Funds. Advice?

[ASB]

Thanks, something to think over there. The main reason I haven't resigned yet is because I was thinking that with CT still outstanding, I should hang around to ensure it's paid. My concern is that cutting and running at this point will not render me any less liable...?

Agreed that in theory I should be able to take the money, in the same way that he is "able" to. I am not sure this sits easily with me really though. I would be much happier to pass it to HMRC as an early tax payment, which I am looking at.

Cheers though..

I am certainly unsure as to the liability should you cut and run. I think it probably would not help with the company liabilities up to that point, but would help for any liabilities afterwards.

Passing on an early tax payment to deal with it as best as possible is on the face it very sound. But there are 2 things to be cautious of.

1) Every time I have done this HMRC have sent it striaght back on the basis that nothing was actually due (admin somewhat in disarray at their end).

2) Where there is an overpayment (and strictly HMRC would view this as one) the company is always entitled to ask for it back. So if your co-director is intent on "robbing you blind" rather than just being misguided they still may be able to get their hands on it.

[Iron Condor]

File your corp tax return early and pay the tax early too.

In hindsight you should have mandated dual signatures on the company bank account.

[MaryPoppins]

File your corp tax return early and pay the tax early too.

In hindsight you should have mandated dual signatures on the company bank account.

Update...! Am going to pay around a third of the required CT early.

And yes, hindsight is a wonderful thing. However, the added twist to this tale is that as the father of my (still!!) unborn child, the other director specified no contact from the 12th of March onwards, so dual sigs would would be a little awkward to achieve currently.

The accountant has informed hiim that he is in the process of completing the CT return and will be declaring his directors loan, as is standard. He has also informed him that interest will need to be paid on top of the loan, and that any amount outstanding beyond Dec 2009 will attract a further 25% liability. This information was not well received, and clear threats regarding the remainder of funds in the business account / evasion of child support have been made.

Am currently slightly baffled as to how it is thought I have any hand in what is a legal requirement upon Directors Loans. As well as mounting disbelief and horror at the situation as a whole, which has disintegrated to a point beyond recognition. That's another story!

[DaveB]

Hey Mary. Good move on the CT payment, I'd pay as much as you can up front and get it out of the company and into HMRC where he can't get at it.

I'd also look more into dissolving the partnership / winding up the business if you can. You are best of well out of it by the sounds of things.

It may well be worth getting your per solicitor to draft a letter from you making it clear what your position in all this is and what you expect him to do in terms of honoring his legal obligations as a director.

Otherwise, best of luck and hope all goes well with the baby!


p.s. He sounds like a right Twat. If it all goes wrong I'm sure there are some folks who could be called upon to administer some CUK education

[Sockpuppet]

As an after thought, if he is claiming that the funds are being taken as loans from the company and the amount is over £5000 then technically he is breaking the law, as Directors Loans are not supposed to exceed £5000 in any one year.

I say technically because it requires a complaint from a shareholder before any action can be taken by the authorities, but it may be something you want to keep in mind.

If he's taken them as loans don't worry.

Fail to pay the CT. Let the company get wound up as insolvent - which HMRC will want to do if you fail to pay the CT.

As these are loans he'll be a creditor to the company and they'll call in the loans in order to pay the remainder of the CT.

[MaryPoppins]

Hey Mary. Good move on the CT payment, I'd pay as much as you can up front and get it out of the company and into HMRC where he can't get at it.

I'd also look more into dissolving the partnership / winding up the business if you can. You are best of well out of it by the sounds of things.

It may well be worth getting your per solicitor to draft a letter from you making it clear what your position in all this is and what you expect him to do in terms of honoring his legal obligations as a director.

Otherwise, best of luck and hope all goes well with the baby!


p.s. He sounds like a right Twat. If it all goes wrong I'm sure there are some folks who could be called upon to administer some CUK education

Thanks Dave. Not sure about winding the business up fully if there are still outstanding debts, i.e. CT, but that is definitely something I'd like to do ASAP - or at least, resign myself. Just need to make sure I've covered everything before cutting and running.

A solicitor's letter has actually already been passed to him, back in January - but its sort of not really worth the paper it's written on, as we are hold equal shares, and my "requirements" for paying the funds back is of little interest to him. However, the news of a potential 25% liability seems to have pushed home the fact that it really needs to be paid back by December.

Your character assessment is spot on, unfortunately. Slightly embarrased to be in this position currently, but I have to hope karma exists!!

[Friendly Accountant]

A few thoughts

If he's taken them as loans don't worry.

Fail to pay the CT. Let the company get wound up as insolvent - which HMRC will want to do if you fail to pay the CT.

As these are loans he'll be a creditor to the company and they'll call in the loans in order to pay the remainder of the CT.

I agree with what Sockpuppet has said. I am not an insolvency practitioner, but in the first instance, I would expect any administrator / liquidator will go after the other director for balances owing to the company. As long as these balances are enough to cover the amounts owing by the company, you may be OK.

I assume that you are no longer running new contracts through the company. If you are, get a new one set up immediately and not put any more of your money at risk.

Keep in touch with the accountant and make sure the loans are properly reflected in the accounts. It may help if you both signed the annual accounts - evidencing his approval of them and further supporting the fact that these amounts are indeed loans in case he tries to argue the point in the future.

If you are making an early payment of Corporation Tax, make sure you clearly indicate with the payment the tax year to which it relates. This will slightly reduce the possibility of HMRC misapplying it and then refunding it to the company. (Sadly, only slightly!)