Failure to Declare Directors Loan + Failure to Pay Corporation Tax

[cunni]

Hi all,

I have recently been under increasing pressures and earning alot less than I used to. Also many things have been occuring, such as car meltdown, etc. I now can't afford to repay my personal debts or mortgage.

I have had no choice but to withdraw more money than was available as company profit over several months. I was wrongly advised that I should declare this as 'dividends' and ensure I pay it all back before the end of the tax year, rather than declare a 'directors loan'.

We are nearly at the deadline for payment of taxes for the 2009/10 period, but I find myself short by some £7500. Here is the problem I now face:

I can't pay myself less to recoupe the monies, as I am currently having to borrow more just to survive. I can't get a personal loan as my credit record is shot to pieces. I am told that if the IR figure out I have been paying myself more than I am entitled to and not declaring a directors loan that I can be sent down.

Can someone help me here, as I am completely at my whits end with this and don't know how to put the money back without landing in a whole world of trouble.

Many thanks.

[Clare@InTouch]

Have you spoken to your accountant about this?

There are two issues here, personal and company.

Personal - If you've taken too much out of the company then the excess will be viewed as a directors' loan, and is repayable to the company. It should also have been declared on a P11D in April (if over £5,000) and shown in your accounts. If you cannot repay the money within 9 months of the year end then there will be additional Corporate Tax to pay (commonly called section 419 tax).

Company - If your company cannot pay it's Corporation Tax then that's another issue. The first thing to do is get the accounts done so you know how much is outstanding. Then call HMRC to see if they will allow a time to pay arrangement. They will ask why the company cannot afford it and you will need to explain any plans you have to repay the money. They may well ask if you can take out a bank loan to pay it.

Best advice all round is to talk to an accountant who can discuss the whole situation with you.

[BoredBloke]

I've had issues paying my corp tax late and they are fairly open to making arrangements. But they take a dim veiw of it if you default. Call them and they are ok but make sure you can stick to what you agree or let them know if you are having problems

[DeludedAussie]

Hi all,

I have recently been under increasing pressures and earning alot less than I used to. Also many things have been occuring, such as car meltdown, etc. I now can't afford to repay my personal debts or mortgage.

I have had no choice but to withdraw more money than was available as company profit over several months. I was wrongly advised that I should declare this as 'dividends' and ensure I pay it all back before the end of the tax year, rather than declare a 'directors loan'.

We are nearly at the deadline for payment of taxes for the 2009/10 period, but I find myself short by some £7500. Here is the problem I now face:

I can't pay myself less to recoupe the monies, as I am currently having to borrow more just to survive. I can't get a personal loan as my credit record is shot to pieces. I am told that if the IR figure out I have been paying myself more than I am entitled to and not declaring a directors loan that I can be sent down.

Can someone help me here, as I am completely at my whits end with this and don't know how to put the money back without landing in a whole world of trouble.

Many thanks.

There are contractors on this forum with a lot of spare cash sitting on account doing nothing.

If you can give security (like a guarantee on your house blah blah) I am sure people might help.

PM me if you like

[cojak]

DA is not a bank or an accountant.

Or even real...

[MarillionFan]

Hi all,

I have recently been under increasing pressures and earning alot less than I used to. Also many things have been occuring, such as car meltdown, etc. I now can't afford to repay my personal debts or mortgage.

I have had no choice but to withdraw more money than was available as company profit over several months. I was wrongly advised that I should declare this as 'dividends' and ensure I pay it all back before the end of the tax year, rather than declare a 'directors loan'.

We are nearly at the deadline for payment of taxes for the 2009/10 period, but I find myself short by some £7500. Here is the problem I now face:

I can't pay myself less to recoupe the monies, as I am currently having to borrow more just to survive. I can't get a personal loan as my credit record is shot to pieces. I am told that if the IR figure out I have been paying myself more than I am entitled to and not declaring a directors loan that I can be sent down.

Can someone help me here, as I am completely at my whits end with this and don't know how to put the money back without landing in a whole world of trouble.

Many thanks.

So the good news is, your on CUK and you will get some advice.

The bad news is, I've known contractors in the same situation who basically have spent the corporation tax, personal tax & VAT on cars, hotels, living it up, flying first class. I've known three.

All three then couldn't get contracts and all three then lost said car, personal posessions, house!

You're not going to get jailed, but you'd better well get off your backside and find a way to start paying it off. Don't bury your head in the sand, just live within your means, get a contract and pay it back!

[cunni]

Cheers guys.

Unfortunatly, I cannot at the moment live within my means, as the incomings from my current contract don't match the minimum outgoings for my mortgage, fuel costs, minimum food allowance and debts, etc.

I am pursuing a loan from a family member, but £10k is alot to stretch to.

My original borrowings from the tax monies within my company were not recorded on the P11D as directors loans. I'm worried the IR will see my plight as fraud or tax evasion.

I am currently trying to sell my home, so as to recover the situation slightly and also to ensure it is not seized and I end up with a mortgage for a home I do not own!

Thanks for you advice guys.

[Scrag Meister]

I had a similar situation at the end of the last company year (3rd), when the accountant rang me to ask what I was planning to do with the £7700 director's loan and I answered "What director's loan?" .

Turns out that they were ignoring my expenses as I had been at the same contract for 2+ years and accrued a load of "loan" (rent, food etc... which I had previously expensed) which wasn't normal salary. Live and learn.

Luckily I was in a position to clear it after a few months, although I didn't fully click on "declaring it a dividend" until I had cleared it.

I hasten to add I hadn't spent the VAT, CT, PAYE etc... that was squirelled away ready for when it was needed.

GL with getting to a managable resolution.