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

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    #41
    Just for reference, here's the penalties for a late VAT return or payment (linky):

    First default - no penalty, you get a letter. If you miss another return or payment in the next 12 months, you get...

    Second default - no penalty. Surcharge liability letter. If you miss another return or payment in the next 12 months, you get...

    Third default - 2% penalty (unless it's less than £400, in which case, no penalty). If you miss another return or payment in the next 12 months, you get...

    Fourth default - 5% penalty (unless it's less than £400, in which case, no penalty). If you miss another return or payment in the next 12 months, you get...

    Fifth default - 10% penalty (unless it's less than £30, in which case, £30). If you miss another return or payment in the next 12 months, you get...

    Sixth default - 15% penalty (unless it's less than £30, in which case, £30).

    So by my reckoning, you have at least six months (two defaults) before they hit you with a penalty. You might want to confirm that with your professional advisors, though.
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      #42
      Penalty for late PAYE (linky)...

      You will not be charged a penalty if only one PAYE amount is late in a tax year - unless that payment is over 6 months late.
      So again it looks like you have six months to get this sorted before they charge you a 1% penalty charge.
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        #43
        Originally posted by TheFaQQer View Post
        Penalty for late PAYE (linky)...



        So again it looks like you have six months to get this sorted before they charge you a 1% penalty charge.
        Yebbut - rather depends why it's late, doesn't it? There is a difference between "forgetting" a deadline and spending the money.

        Whether or not HMRC will realise that is another matter, of course, but strictly speaking the OP has acted negligently and failed in his duty as a director, which is in the scope of the Companies Act, not the Finance Bill.
        Blog? What blog...?

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          #44
          Originally posted by malvolio View Post
          Yebbut - rather depends why it's late, doesn't it? There is a difference between "forgetting" a deadline and spending the money.

          Whether or not HMRC will realise that is another matter, of course, but strictly speaking the OP has acted negligently and failed in his duty as a director, which is in the scope of the Companies Act, not the Finance Bill.
          I agree completely. But I "reckon" you might get away with just ignoring the letter and being late a couple of times with no explanation, and hoping they don't hit you for negligence.
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            #45
            Originally posted by deeniguy View Post
            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
            Do you have any cash at all in the Ltd, so you can take a further Director's Loan, buy more shares now that they're even cheaper and then repay everything when they go through the ceiling?
            The material prosperity of a nation is not an abiding possession; the deeds of its people are.

            George Frederic Watts

            http://en.wikipedia.org/wiki/Postman's_Park

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              #46
              Originally posted by deeniguy View Post
              Yes, you are correct, i've been paying myself salary every month and the directors loan i started borrowing around December and continued every month until Feb expecting to pay the final loan by March/April (I took multiple director loans totalling just under 5k). Everytime i used a directors loan i paid it off when my salary was due, however the last directors loan was taken to pay unexpected bills and also investment in a stock, which you were also correct to point out. Unfortunately, the stock didn't return as expected, hence the delay in payment.

              I understand it was foolish to borrow money to use for such activities but i've learnt my lesson now and vow never to risk going down this road again. If all goes well, i should be able to pay off the taxmans money in 2-3 months time, but of course that's not guarunteed. In the meantime, im doing all i can to find another contract job to pay this off ASAP.

              Just to let you know, my accountant knew everything about my situation with IR35 and the fact that i take out director loans as described above. Never once did they discourage but did advise to ensure i pay on time. Im with Danbro based in Blackpool. Let's hope HMRC are not too hard on me, but i don't think it will be a good idea to mention where i spent the loan
              Investing in stocks lesson 101:
              Never ever buy stocks with borrowed money

              By breaking this rule you don't deserve any sympathy

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                #47
                Originally posted by TheFaQQer View Post
                I agree completely. But I "reckon" you might get away with just ignoring the letter and being late a couple of times with no explanation, and hoping they don't hit you for negligence.
                Just read this about PAYE penalties as well: "You will not be charged a penalty if only one PAYE amount is late in a tax year - unless that payment is over 6 months late."

                So really i have until October 2014 to get this mess cleared up since PAYE/VAT was due in April.

                If i can avoid explaining my loan situation to HMRC until then, id rather go ahead with that.

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                  #48
                  Originally posted by Eirikur View Post
                  Investing in stocks lesson 101:
                  Never ever buy stocks with borrowed money

                  By breaking this rule you don't deserve any sympathy
                  I know it was a big mistake and completely foolish, i accept im at fault, but im not thinking about the past for now, it won't help, just looking for solutions to get out of this problem. Appreciate the advice from the board.

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                    #49
                    This may help HM Revenue & Customs: Payment problems: if you can't pay the VAT due to HMRC
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                      #50
                      Originally posted by deeniguy View Post
                      Just read this about PAYE penalties as well: "You will not be charged a penalty if only one PAYE amount is late in a tax year - unless that payment is over 6 months late."

                      So really i have until October 2014 to get this mess cleared up since PAYE/VAT was due in April.

                      If i can avoid explaining my loan situation to HMRC until then, id rather go ahead with that.
                      If your loan has spanned the Financial Year End of your Company, they will be well aware of it.

                      You might want to take counsel from your "Accountant" with regards to changing your Financial Year End and extending it?
                      I was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).

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