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Fight to save Ltd or not

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  • GregRickshaw
    replied
    Originally posted by uk contractor View Post
    Good luck hope it all works out but £84K is a massive hole to climb out of & realistically I would start protecting any assets you have left like your main property from being eventually seized if you cannot find a new income stream pronto..
    Are you able to expand/advise/help on the best way to protect ones main property?

    Leave a comment:


  • uk contractor
    replied
    Originally posted by oliverson View Post
    Currently I'm undecided.............

    Some of you may be aware that I was originally going to post this under a new account, because to be honest it's quite embarrassing, but the more I think about it, it's not embarrassing at all. The government forcing through IR35 and the lack of government support for Ltd company directors in their coronavirus support packages have gotten me to this point. Sure the directors loan is high but I intended to chip away at that overtime. Here goes....

    I have been contracting a while but been on the bench now for several months, some of it by choice. My war chest has become depleted and the bounce back loan will run out by the end of this year. I'm looking at the market and it's just dreadful. So, my question is this, is it worth fighting to save my Ltd company when there are a number of financial issues:
    1. Corporation Tax due end of year (£ 18k)
    2. VAT deferred (£6k)
    3. Bounce back loan (£30k)
    4. Directors Loan (£ 30k)


    I mean, it's going to take me forever to repay all of that. It would assume I can remain in outside IR35 contracts without break for many years, which seems unlikely. Instead of trying to do this, why not just walk away and take an umbrella/PAYE role instead. Sure, the net monthly would be less but I wouldn't have to try and pay all this off. The government is backing the bounce back loan so I could just walk away from that. The Directors Loan would probably be hung on me as 'dividend untaken'. What about the CT and VAT?

    Let me close by saying that this is something I never wanted to do. At the start of this year the company was in a decent enough state. From the list above all taxes would have been paid on time and I wouldn't have needed the bounce back loan. My project was that by the end of this year I'd have tens of thousands in my war chest. Sadly, IR35 and the pandemic, in particular the governments lack of a support package for Ltd company directors, have both conspired against me. I am of course praying that something comes along to avoid all of this. Like many others I guess.

    Thanks for reading.
    Good luck hope it all works out but £84K is a massive hole to climb out of & realistically I would start protecting any assets you have left like your main property from being eventually seized if you cannot find a new income stream pronto.

    The IT job market is really in a terrible state right now hope does not pay the bills like so many of us you are looking at a long time on the bench as it does not appear to be turning around anytime soon & supply & demand factors mean you would have to work for low rates to secure any role right now.

    Best Wishes but look into preserving your main home at least so you have somewhere to stay! All any accountant will advise is similar & perhaps downsizing to raise capital.

    HMRC will aggressively pursue you in a few months for their money they are not known for being very helpful or sympathetic unfortunately.

    Leave a comment:


  • jayn200
    replied
    Directors loan is an asset not a liability and it looks like from your post it's due soon. Do you have any intention of paying it back?

    Your company's assets can pay your short term liabilities. Your company just needs to collect on your directors loan.

    Leave a comment:


  • simes
    replied
    Originally posted by oliverson View Post
    as I said on page 1, I intended posting this under a different account because of the embarrassment ...
    Your undoubted pain notwithstanding, is the nomenclature oliverson any more known to us or the world than any other handle one could temporarily choose for you?

    How much more virtual can virtual embarrassment actually be?

    Leave a comment:


  • cojak
    replied
    Originally posted by oliverson View Post
    as I said on page 1, I intended posting this under a different account because of the embarrassment but I am now entirely certain I've done the right thing because I suspect there's a LOT of others reading this, going through the same anguish.

    Leave a comment:


  • jamesbrown
    replied
    Agree. Hopefully a few accountants etc. will be watching too and can give some solid advice...

    Leave a comment:


  • oliverson
    replied
    Originally posted by jamesbrown View Post
    Perfectly reasonable thing to do and worth posting, because you can bet that many others will be wondering the same thing.
    as I said on page 1, I intended posting this under a different account because of the embarrassment but I am now entirely certain I've done the right thing because I suspect there's a LOT of others reading this, going through the same anguish.

    Leave a comment:


  • jamesbrown
    replied
    Originally posted by oliverson View Post
    What I am trying to do here is not avoid paying what is due but planning for a worse case scenario.
    Perfectly reasonable thing to do and worth posting, because you can bet that many others will be wondering the same thing.

    Leave a comment:


  • oliverson
    replied
    Originally posted by Paralytic View Post
    Have you taken any out of the company since it was clear it was unviable (other than the directors loan)?

    An argument could be made by creditors that you were trading while insolvent or not a viable business and therefore not performing your fiduciary duties as a director.
    Who says the company is unviable? I could land a contract to start in a few weeks and this problem goes away; both the Corp Tax and VAT would be paid when due, the directors loan would remain as is and the bounce back loan repayments would commence April 2021. What I am trying to do here is not avoid paying what is due but planning for a worse case scenario.

    Leave a comment:


  • GregRickshaw
    replied
    As others have said

    Your DL is your biggest problem really but not insurmountable.

    I had around 19k DL, I then paid some back into my Business account marking it as DL so accountants could see and tax returns were adjusted accordingly, I also reduced it by paying VAT and PAYE, NI etc., from my personal accounts your accountant will mark this a DL repayment and reduce the loan.

    If your company is dormant, not-trading etc., once the DL is sorted, you can then get TTP CT and VAT as long as you talk to them, they will help if you are up front and honest.

    'I think' we are allowed around £10k before the extra interest and tax kick in so aim to get it to around that figure.

    Leave a comment:

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