Director Loan - Debt Recovery?

[MaryPoppins]

Surely you can advise the bank that he 'stole' money from the account and you insist he is denied access to it. Or open another account with another bank and close that one?

If I were you, I'd be telling the police he stole the money. They can track him down if they want to.

I've spoken to the bank, and because there is only one signatory required to withdraw etc, I am able to close the account myself. I have held back from doing this however as I wasn't sure how that action might be viewed by HMRC.

He hasn't really stolen the money, as it is to be accounted for as a Directors Loan in the accounts. He has never stated that the amount will not be repaid, but his actions do appear to very much paint that picture

I've considered all the ways I could get to him, and lessen the impact on me. The fact is, there probably isn't a way. We're both directors, and I'm now paying for that mistake. Lesson learned.

[grey_lady]

Eek - awful situation, just wanted to reiterate what someone else said about the moneysaving expert forum being useful. There are also tax/accountancy/legal forums where you might be able to get some free advice.

Business link has a guide on their website as to what the process would be for non-payment of CT. I hate to say it but I have heard that they can take your personal stuff, but not basic things that you need to work or live. (that might have been about self-employed rather than ltd though)

Is a repayment plan with HMR&C not feasible at all? 18k over 5 years say is
300 a month although interest might be added on.

It's awful and stressful now, but no matter what happens, you will get through this and in a couple of years it will be behind you.

[MaryPoppins]

Eek - awful situation, just wanted to reiterate what someone else said about the moneysaving expert forum being useful. There are also tax/accountancy/legal forums where you might be able to get some free advice.

Business link has a guide on their website as to what the process would be for non-payment of CT. I hate to say it but I have heard that they can take your personal stuff, but not basic things that you need to work or live. (that might have been about self-employed rather than ltd though)

Is a repayment plan with HMR&C not feasible at all? 18k over 5 years say is
300 a month although interest might be added on.

It's awful and stressful now, but no matter what happens, you will get through this and in a couple of years it will be behind you.

Thank you, I will have a look. I've posted on an accounting forum without much luck. Will try the moneysavingsexpert one.

Obviously I'd have to pay it back if that was my only real option, it would probably mean me and baby having to perhaps move back in with my parents if I am stuck on this day rate/not working.

[ASB]

He hasn't really stolen the money, as it is to be accounted for as a Directors Loan in the accounts. He has never stated that the amount will not be repaid, but his actions do appear to very much paint that picture

Theft itself is a very difficult thing to prove in fact. It is necessary to establish that the intent was to permanently deprive the owner of their goods (this is why TWOC came about as a specific offence).

But although the loan is noted in the accounts this may just be benevolent accounting treatment.

If there was no board meeting minuting the loan then it is questionable whether he had any entitlement to the loan in the first place. I assume the company has made a formal demand for it to be repaid? If he has failed in this then it does perhaps show intent? Perhaps look for anglo irish bank and directors loans one link: http://news.bbc.co.uk/1/hi/world/europe/8380448.stm

Of course none of this helps get the money back, but it helps in showing that you haven't been negligent. In this case you are in a much stronger position to negotiate with HMRC. Ultimately, sorry to say, HMRC are entitled to their money (from the company). The fact that a 3rd party has run off with the money isn't really their problem. But, they will negotiate. You are trying to do the decent thing, but businesses do fail all the time because of frauds perpetrated against them.

However it pans out good luck. And don't forget, Karma will catch up with the scrote sooner or later.

[MaryPoppins]

Thanks ASB.

Because of complications (i.e., a baby), there has been no communication between us. I have sent one email to the email address I have for him (from the Co email account) requesting confirmation that the amount will be repaid in time to pay the CT – there was no response from him. A formal demand is difficult as I don’t know his whereabouts.

There are no meeting minutes reflecting agreement for him to take the loan. I’m not sure if that will have any bearing though, in reality.

As you say, the reasons behind the unpaid bill will probably be of little interest to HMRC.

[grey_lady]

A judge cannot make you pay what you don't have btw, e.g if you bring home 1000 a month, and 900 goes on rent/mortgage/utilities/food they can't make you pay 300 a month debt repayment, because you don't actually have it. They also can't expect you to make re-payments out of any child benefit money.

Only ever offer what you can afford and dont forget that you might need rainy day money for between contracts.

[MaryPoppins]

A judge cannot make you pay what you don't have btw, e.g if you bring home 1000 a month, and 900 goes on rent/mortgage/utilities/food they can't make you pay 300 a month debt repayment, because you don't actually have it. They also can't expect you to make re-payments out of any child benefit money.

Only ever offer what you can afford and dont forget that you might need rainy day money for between contracts.

Rainy day money is a struggle at the moment, so the idea of repaying 18k is laughable.

[TheFaQQer]

- HMRC cannot use the transfer of obligations provisions to move the debt to you unless it can be shown that you were negligent (if he was able to write cheques and you started chasing as soon as he did then I think this would be at least a difficult hurdle).

- HMRC can do everything they described. But with one important detail that may not have been entirely clear. They cannot take away YOUR belongings. They can take away the company's though.

Those two points contradict each other - if HMRC argue negligence successfully, then they will transfer the debt to you personally. In which case, they can take away YOUR belongings.

Has he got any family that you can track down? As a different thing, have you spoken to the CSA - from what I hear, they can be pretty effective in finding people and getting money out of them.

[MaryPoppins]

Those two points contradict each other - if HMRC argue negligence successfully, then they will transfer the debt to you personally. In which case, they can take away YOUR belongings.

Has he got any family that you can track down? As a different thing, have you spoken to the CSA - from what I hear, they can be pretty effective in finding people and getting money out of them.

I am not sure how they could argue that I have been negligent really.

His mother works and lives locally. I have been in contact with her recently, but only for her to tell me to leave her son alone. She has been fairly threatening towards me so I'm not keen on following that up, it wouldn't go anywhere.

As for the CSA, they were in contact with him but he has failed to respond to their requests for his income. They are now attempting to trace him through HMRC apparantly.

[Paddy]

I have quickly read through the posts. I do have a couple of suggestions to get back your £18k. If you take the debt to court you can get judgement against him even if you can’t find him and he does not turn up. All you need to do is to serve him at his last known address. After judgment and in his absence you then can periodically add costs and interest. There is no time limit to keep the debt live once you have judgement against the debtor as long as you keep popping to the court every year to add interest and costs. Maybe in ten years time you could recover the money when he is off guard. By then it will be about £30k.

There is nothing stopping you taking out a summons in joint names of you and your limited company.

If the debt is, or when it gets to around £25,000 ; the debt can be transferred to the High Court. Once the debt is in the High Court it’s a whole new ball game. You then can take out a High Court Writ. High Court Bailiffs (High Court Sheriff) have the rights to recover the debt anywhere in England and Wales and they enter any property owned or even not owed the debtor, freeze bank accounts etc.

You must follow certain protocols and procedures to do the above properly and if you choose to do so I can point you in the right direction.