let down by accountant - personal tax bill I can't pay

[Wanderer]

I'm more than slightly concerned that if I can't pay my personal tax bill I will be pursued through the courts, resulting in a CCJ. I work in the financial industry and a CCJ would lead to instant dismissal leaving me with no hope of paying the bill.

Doing nothing will result in a pile of problems. You need to act quickly to sort the mess out and this will require professional help.

We really can't give you specific information about what to do without seeing your accounts and how you ran the company. Even if you did post the details in public here you would probably be derided rather than helped, unfortunately.

My recommendation is that you sack your accountant and shop around for a new one who can do an impartial review your accounts and see what can be done. There is a discussion of Recommended Accountants and some accountants post useful responses on this forum. You can also support this forum by clicking on one of the banner ads for accountants which advertise here.

As for the court/CCJ, my understanding is that HMRC will do this as a last resort and will be reasonable if you approach them and ask for help so you can probably avoid court proceedings. Get a decent accountant engaged first though - HMRC don't always give you the best advice and they aren't there to tell you ways that you can legally lower your tax bill.

[northernladuk]

How do you get into trouble being paid as salary only? Or was he ignoring PAYE?

How is it that somebody earns banking type money, but can't possibly get a loan and/or credit cards to pay the tax?

Odd thing is the more you earn the more trouble you get in to when it all goes wrong I guess. If the OP has been able to drawn £100k in divis and didn't run his tax affairs properly he will be in a lot worse situation if he could only draw £50k divis... if that makes sense.

[NotAllThere]

Probably not a sockie. Far more detail posted here. He didn't take into account higher rate tax on divvies, it looks like.

[BrilloPad]

Probably not a sockie. Far more detail posted here. He didn't take into account higher rate tax on divvies, it looks like.

From your link it does not looking like a sockie - but the OP certainly did.

The extra 50% for the following year can be withdrawn if you think you are not going to pay that much for the next year. I did this once - some form to fill in. If business is bad you will be able to do that okay.

Obviously try to find the money from somewhere. If not, you can usually negotiate to pay HMRC within 3 years. Discuss it with them. . Don't ignore them. They would rather accept some money rather than none.

Next time remember you need a war chest. Spend the minimum you can. And find out what are your liabilities and plan. If you can't then contracting is not for you.

This is a SERIOUS business not to be entered into lightly.

All the best and please let us know how you get on.

BP

[northernladuk]

I have been paying for an accountant to look after my finances but was not made aware I would need to pay income tax on Dividends as I naively thought I only paid corporation tax on them.

And invest in either an accounting book or a short course. Not knowing you pay tax on dividend income is beyond naive I am afraid and you should have understood this before entering into that kind of setup. The whole reason for doing it is because you pay LESS on dividend income. It's pretty fundamental to the model we use.

[SueEllen]

And invest in either an accounting book or a short course. Not knowing you pay tax on dividend income is beyond naive I am afraid and you should have understood this before entering into that kind of setup. The whole reason for doing it is because you pay LESS on dividend income. It's pretty fundamental to the model we use.

Unfortunately people presume incorrectly that if they have an accountant doing their returns they can be completely hands off.

They don't understand that the accountant is an advisor and to get the best advice from that person they need to do some research first and ask questions on the things they don't understand.

[Scrag Meister]

Really sorry to hear about your predicament, not a fun place to be.

I manage to avoid this situation.

1. Accrue CT in a separate account, each time a div is paid and a final one at year end.
2. Keep VAT money separately too, as soon as the invoice is paid.
3. Keep up to date with salaried PAYE payments, I pay on a quarterly schedule.
4. When you do pay divis, immediately accrue the personal tax in another account, held personally.

Hope you get sorted out.

[d000hg]

Must be a sockie!

If you can't manage your own finances and dive into paying yourself via a ltd co and feck it up that bad, I'd rather you didn't get into a financial institution that I may be a customer of.

Seems rather stupid position to take. You're hired for your software/IT skills not your knowledge of tax law.

[BrilloPad]

Seems rather stupid position to take. You're hired for your software/IT skills not your knowledge of tax law.

I beg to differ Sir.

If you are running a company you have responsibilities - you must take them seriously.

NLUK was quite terse above - but he is right!

Of course the OP cannot go back in time - but id he follows the advice in the posts above he can get this sorted out and make sure it does not happen in the future.

Well done cuk!

[MarillionFan]

Must be a sockie!

If you can't manage your own finances and dive into paying yourself via a ltd co and feck it up that bad, I'd rather you didn't get into a financial institution that I may be a customer of.

Once met a contactor(ex) who had done the same thing in mid 2001 when the market crashed, He'd been on a £600 per day rate in London. He ate at the best restaurants, flew everywhere first class, hotels, room service. Also took out a lease on a high end sports car & had a small flat. He'd not only spent all of the money in his business account basically living month to month.

Of course, he'd then lost his contract as Y2K has finished. Couldn't get another, then dipped into his VAT money. He couldnt pay his Corp Tax, personal tax & worse still the VAT.

They took him for the lot, took his flat, possessions, car went back & bankrupt.

There's a lesson there.