Corporation Tax Struggles and closing down ltd company

[somecompany]

Hi All

Looking for some advice here, I have spoken to my acountant and unfortunately have not had much help. Not sure they have have even been monotoring my books since I never ever hear from them about advice on what to do etc.

Anyway, been contracting for 3 years, first years CT paid fine, second year (paid 1st Januarry 2011) I am struggling a little, I owe about 7k in CT after making an initial payment of what I could afford. I called up HMRC and worked out a payment plan and they were happy to oblige. However I am now looking at closing down my company and accepting a permanent position. I am owed a little bit back from my current assignment 4 weeks in arrears plus the 4 weeks notice period which should cover the 7k. However I will then struggle to pay the 3rd years CT on 1st Jan 2012.

I have worked it out and it should be around 8k that I will owe for my 3rd year. I dont want to pass up a permanent position like this one as I dont think this kind of opertunity will come again. Is there anything I can do, is taking out a personal loan a solution?

[Clare@InTouch]

Taking a personal loan would be fine.

A company should always have enough money set aside to pay it's CT. If you haven't, and yet you're showing a profit on which tax is due, presumably this means you've taken too much in dividends? Depending on how your accountants have treated this it may well have created a loan account (you owing money to the company) so you repaying it via a personal loan would be the correct way forward.

[somecompany]

Taking a personal loan would be fine.

A company should always have enough money set aside to pay it's CT. If you haven't, and yet you're showing a profit on which tax is due, presumably this means you've taken too much in dividends? Depending on how your accountants have treated this it may well have created a loan account (you owing money to the company) so you repaying it via a personal loan would be the correct way forward.

Yeah, turns out I've been taking to much in dividends, it looks like my accountant just wrote up my books and final accounts as if I was taking the normal amounts and didnt overpay myself.

[somecompany]

But what I am trying to say is, if I stop trading as a LTD company and I accept a permanent possition with someone, I wont be able to afford my 3rd years CT payments. So in that case, will my company just get struck off? Or will I need to work out a payment plan from personal account?

[jmo21]

To be blunt, you've made an arse of it, so blaming your accountant doesn't wash, the basic calculations are really not difficult.

Even just setting aside 21% of every invoice (the pre-vat figure, and forget about the expenses side of things) and you would be able to easily keep track of what your company owes.

[prozak]

To be blunt, you've made an arse of it, so blaming your accountant doesn't wash, the basic calculations are really not difficult.

Even just setting aside 21% of every invoice (the pre-vat figure, and forget about the expenses side of things) and you would be able to easily keep track of what your company owes.

Agree.

It is NOT your money until you work out a legal way to get it into your hands.

You cannot pay a dividend without profit or capital.

I do not think it is legal as you are then trading insolvent (or something like that ).

you must have a loan account, which to be quite frank, is also going to land you in the SH!T.

Not your Accountants fault per se... but what the feck have they been doing letting you take money willy nilly without any advice....

[somecompany]

Not your Accountants fault per se... but what the feck have they been doing letting you take money willy nilly without any advice....

Thats what I am trying to find out from them and the best way forward, but as I said I'm not getting much help out of them.

What I want to know is, if I leave my current contract and take on a permanent position, I will get enough pay after I leave to settle 09\10 tax bill, 4 weeks pay for the notice period and 4 weeks from arrears. However the issue will come in when it comes to pay for 10\11. Would I be able to come up with a payment plan with HMRC from my personal account?

[jmo21]

Thats what I am trying to find out from them and the best way forward, but as I said I'm not getting much help out of them.

What I want to know is, if I leave my current contract and take on a permanent position, I will get enough pay after I leave to settle 09\10 tax bill, 4 weeks pay for the notice period and 4 weeks from arrears. However the issue will come in when it comes to pay for 10\11. Would I be able to come up with a payment plan with HMRC from my personal account?

You'll have budgeted for next years accountants fee too of course?

[somecompany]

You'll have budgeted for next years accountants fee too of course?

Yep, I have.

[LisaContractorUmbrella]

HM Revenue & Customs: What to do if you can't pay Corporation Tax

See link above from HMR&C site
HTH