Cannot pay VAT/PAYE due to Director's Loan - Need Advice !

[tractor]

Is that the legal situation Lisa? Surely when a company charges VAT it is their money, but HMRC will then legally require it is paid back to them i.e. it is money you owe HMRC not money you are holding for HMRC... the same as CT? If VAT money belongs to HMRC from the start, why am I allowed to earn interest on it?

For the same reason that if you pay CT early, the taxman will pay you interest on it. Quite a healthy rate too

[tractor]

...

So being inside IR35, taking a director's loan should be a complete NO NO? If this is a common practice, then yes i will have a word with my accountant and express my disappointment. If not, then the blame lies solely with me.

Sorry but regardless, the blame lies solely with you!

[deeniguy]

If you looked at the stock and decided it was going to go up and you were wrong, what makes you think you're right now? Your track record isn't exactly good. There are many companies out there who make good money from people like you who, even in the face of declining prices, continue to refuse to admit they bought the wrong thing and cling to the hope that the price will not only change direction but go on to exceed the original purchase price.

Sell now. Get at least some capital out of this failed gamble. Then you'll at least have some cash to offer the VAT man.

Its only a fail if i sell the shares, which i don't intend to until i make at least enough to break even and pay this off at least. Its a long story but it tanked due to an unexpected debt followed by dilution and short sellers. I strongly believe in the stock and its potential, so id stick to my original plan and hold for another 3 months. After 6 weeks of a bloodbath its finally 40% up today so that's something positive

[deeniguy]

If they are American OTC shares, I suspect that it's not going to be that easy to get rid of. But some kind of income has to be better than nothing.

Yep, OTC it is, i can get rid of them if i want, but im down like 80% so no point getting out now... im willing to wait it out as long as i can and try getting a job ASAP hopefully, if not, yes i will have to sell as a last resort (Even then it won't be enough to pay off the taxman)... Worst case scenario would be no job, sell shares and be pretty much pennyless.. in this situation, what can the taxman do? Take personal belongings etc?

[eek]

Yep, OTC it is, i can get rid of them if i want, but im down like 80% so no point getting out now... im willing to wait it out as long as i can and try getting a job ASAP hopefully, if not, yes i will have to sell as a last resort (Even then it won't be enough to pay off the taxman)... Worst case scenario would be no job, sell shares and be pretty much pennyless.. in this situation, what can the taxman do? Take personal belongings etc?

Tricky as you won't be personally bankrupt.... However you could be banned as a company director...

[cojak]

Will umbrellas take him on after being banned?

[kal]

I doubt wonga is foolish enough to lend him the money. Even they have some standards you know...

True, I have some magic beans I could be persuaded to exchange for a cow if the OP is interested?!

[LisaContractorUmbrella]

Is that the legal situation Lisa? Surely when a company charges VAT it is their money, but HMRC will then legally require it is paid back to them i.e. it is money you owe HMRC not money you are holding for HMRC... the same as CT? If VAT money belongs to HMRC from the start, why am I allowed to earn interest on it?

Are you sure you're not being a gnats pedantic d000hg I am not sure what the legal position would be but i can't see you ever making a successful argument that the money does not de futuro belong to HMRC - 20% of the invoice value that you send to a client is tax it's not income. That's not to say that you can't use the money whilst it's in your account but to think of it as 'your' money is just asking for trouble IMHO

[LisaContractorUmbrella]

Will umbrellas take him on after being banned?

Yes it would make no difference to an umbrella co

[TheFaQQer]

Worst case scenario would be no job, sell shares and be pretty much pennyless.. in this situation, what can the taxman do? Take personal belongings etc?

Yes. Theoretically, the business has limited liability, so you personally have no liability. However, if a director has acted negligently, then they can come after the director personally.

By not recalling the loan, which the company has the legal right to do, then I think you'd have a great deal of (expensive) difficulty in convincing anyone that you haven't breached your legal responsibilities as a director - gambling the money that was due to HMRC is pretty negligent.