Reply to: Not paid HMRC or done any paperwork.. how screwed am I?

[mudskipper]

Glad it all got sorted. Hope you bought him a bottle of expensive whisky!

[mreades]

Update

Hi all,

I've got an update on this for you.

An accountant contacted me via this forum and I ran him through everything. After getting all of my paperwork in order, he managed to file all of my accounts. I am now 100% up to date on everything I owe the tax man and have paid myself the remaining dividends.

I HIGHLY recommend my accountant. Not only did he fix all of my problems. He did so while I was living in another timezone and only had contact with me via email.

I won't post his details here without his permission but if anyone needs someone to dig them out of a hole (or generally do their accounts) then drop me a message.

Many thanks to those that helped.

edit: also, I was just weeks away from being struck off by companies house, goes to show, it never is too late to seek help...

[TheCyclingProgrammer]

I presume if we are talking about 2013 here he isn't in much danger of HMRC come to the conclusion he has been either committing tax evasion or even fraud?

Same question for being struck off under the Company Directors Disqualification Act 1986. At what point does he need to start worrying about this?

I'm not sure OP has to worry about anything like that if they get this sorted ASAP.

I'd be more worried about having not paid the VAT man!

[TheCyclingProgrammer]

The "loan" was taken out before December last year, I presume (that's when the OP stopped having clients) so it would be £5k.

Good point!

[northernladuk]

I presume if we are talking about 2013 here he isn't in much danger of HMRC come to the conclusion he has been either committing tax evasion or even fraud?

Same question for being struck off under the Company Directors Disqualification Act 1986. At what point does he need to start worrying about this?

[TheFaQQer]

Some creative accounting might help to explain some of your withdrawals but a director's loan over £10k means BIK issues. You'll have to clear the loan account by declaring a legal dividend which can only be done with enough net profit.

The "loan" was taken out before December last year, I presume (that's when the OP stopped having clients) so it would be £5k.

[tractor]

...

Some creative accounting might help to explain some of your withdrawals but a director's loan over £10k means BIK issues. You'll have to clear the loan account by declaring a legal dividend which can only be done with enough net profit.

I'd say your most pressing issue is to sort out your VAT liability, followed by ensuring all of your paperwork is correct. Then you can get your accounts sorted out to work out how much profit you have left after covering all of your potential fines and liabilities and then using this to declare a dividend to clear the director's loan account.

Finally you'll need to get the company wound up.

You need to find a good contractor accountant and ask them to help you fix this, step by step.

Exactly this and I have said it before in this thread, do not ignore the late filing at Companies House ESPECIALLY if you have 32k in the co accts. If they strike you off before you get this sorted, you will lose it all and you will still owe the corporation tax, VAT and PAYE.

[TheCyclingProgrammer]

Am I being stupid for thinking the mess is not that big? Either call it all a directors loan or salary payments (which will attract tax + NI) and do all the missing end of year stuff and VAT paperwork then pay the fines / what is owed?

I've taken 16k out without paperwork and have around 32k in the account. Surely that will cover me and I'll still get a good amount of that 32k to take home?

Some creative accounting might help to explain some of your withdrawals but a director's loan over £10k means BIK issues. You'll have to clear the loan account by declaring a legal dividend which can only be done with enough net profit.

I'd say your most pressing issue is to sort out your VAT liability, followed by ensuring all of your paperwork is correct. Then you can get your accounts sorted out to work out how much profit you have left after covering all of your potential fines and liabilities and then using this to declare a dividend to clear the director's loan account.

Finally you'll need to get the company wound up.

You need to find a good contractor accountant and ask them to help you fix this, step by step.

[CloudWalker]

Put your hands up and say fair cop to HMRC then Bend over and assume the position.

[TheFaQQer]

Hardly see how he needs a contractor accountant. This is a classic 1-man business screwup, he just needs to dump everything on someone and get them to figure out the paperwork he should've done.

I concur. From here, someone who understands how to sort out the VAT and other tax mess is what they need - the usual advice and guidance from a contractor accountant would be great if this was a going concern, but all I would think they need is someone to sort out the accounts and deal with the penalties.

[northernladuk]

Hardly see how he needs a contractor accountant. This is a classic 1-man business screwup, he just needs to dump everything on someone and get them to figure out the paperwork he should've done.

Contractor accountant will have a better view on his expenses and what we can get away with. Any old one man band might suggest divi waivers or not understand accommodation expenses and all that. Don't get me wrong he COULD do that and probably come to some kind of conclusion but much rather do it right.

If he has to dump on someone why not dump it on someone that knows best?

I speak from experience btw. I had a one man local accountant and he screwed it up big style and moved to a contractor accountant and no had a problem in god knows how many years. Maybe I am being a bit anal about it but that is MHO.

[d000hg]

Hardly see how he needs a contractor accountant. This is a classic 1-man business screwup, he just needs to dump everything on someone and get them to figure out the paperwork he should've done.

[northernladuk]

People running 1-man businesses very often do exactly this kind of thing so I wouldn't count it impossible this isn't real.

Reminds me of reading about Siegfried's accounting system in the James Herriot books.

If real, just find your nearest local accountant and phone them up to arrange a visit.

Unfortunately I would say this is probably not the best thing to do. Last thing you want in the mix is another accountant that doesn't understand contracting. Also his local accountant would be in Asia which isn't going to help.

Ring one of the people that give good advice and are leaders in contractor specific accounting. InTouch, Nixon Williams, SJD spring to mind.

[d000hg]

People running 1-man businesses very often do exactly this kind of thing so I wouldn't count it impossible this isn't real.

Reminds me of reading about Siegfried's accounting system in the James Herriot books.

If real, just find your nearest local accountant and phone them up to arrange a visit.

[tractor]

...

Be a bit of a bummer if they decide to open an IR35 investigation off the back of this

Yes, one could hardly use the defence of 'I was operating as a real business'