Totally theoretical question.....

[girlfriday]

If there are 2 people who are joint 50/50 directors in a limited company, running for less than a year and say one of those directors (director 1) wants out and, in retaliation, the other (director 2) decides to basically raid the accounts and steal everything that was kept in the holding account for corp tax; what would be director 1's options as far as recovering monies, any legal implications, HMRC, etc?

Purely theoretical, of course.

[eek]

If there are 2 people who are joint 50/50 directors in a limited company, running for less than a year and say one of those directors (director 1) wants out and, in retaliation, the other (director 2) decides to basically raid the accounts and steal everything that was kept in the holding account for corp tax; what would be director 1's options as far as recovering monies, any legal implications, HMRC, etc?

Purely theoretical, of course.

The police would be my starting point. Or at least a conversation with director 2 mentioning that you will be contacting the police unless the money was returned within 2 days.

[BA to the Stars]

What was on the bank mandate of the company accounts - was it both to sign?

You may want to search for a thread by Mary Poppins from a couple of years ago where she faced a not so theoretical but similiar situation.

[cojak]

Oh Dear.

A lot of heartache for Director 1 and very little comeback for Director 2, that's what.

Work your way through this post, an esteemed regular had something very similar happen to her.
http://forums.contractoruk.com/accou...-recovery.html

But 'theoretically' HMRC must be told about the situation pronto...

[cojak]

PS. And it's not stealing, it's a Director's Loan.



(And a very good reason for not getting boy/girl friends not too close to one's business.)

[cojak]

How can the OP stop this from happening in the future?

When she tells him that 'it's over'?

Over to the panel...

[northernladuk]

(And a very good reason for not getting boy/girl friends not too close to one's business.)

Amen to this. We have posters here that has had this happen with wife and husband as well. It is normally mentioned when people ask about entering in to this kind of setup but rarely heeded.

[northernladuk]

Here is the thread from Mary Poppins that has been mentioned...

http://forums.contractoruk.com/accou...ds-advice.html

and

http://forums.contractoruk.com/accou...-recovery.html

[BlasterBates]

I´m not an accountant but I see a couple of options.

Firstly you need to establish whether taking the money was legal. It is only legal if it has been sanctioned either as salary, divis or a loan. If not then I would expect you can simply take legal action to recover it. If it isn´t sanctioned i.e. not legal then I agree with the above advice that this could possibly be dealt with as fraud.

If he has taken this as a loan then if there is a debt that can´t be paid then the money will be chased after through the courts by the liquidator, when insolvency is inevtiable. In this case you ought to be able to inform the director that you will instigate liquidiation and in the end he will be liable for the debt. If he doesn´t respond to you personally you could get a lawyer/accountant to do this. This may make him realise that taking the money and running is not an option other than as a self-destructive exercise.

You need to check with your accountant first, i.e. was it a legal transfer and take it from there.

In my view simply transfering money from the company accounts as "retaliation" will end up being equally painful for the other director so it isn´t a rational thing to do, a bit like starting a nuclear holocaust.

[northernladuk]

You could point out that the ramifications for spending corp tax money and not being able to pay HMRC will affect both directors so isn't something you can do and get away scot free but I would say when people are so aggrieved that they think this is acceptable to do threats from HMRC don't really matter.