Reply to: Advice needed urgently

[Yonmons]

Thank you all for the comments. I took the advice from most of you and decided to walk away from it all.

Don't think this is the case as HMRC stopped companies house this time. I don't know if they will be able to go after the first debt also?

S

Once a Company is disolved thats it there no chasing debts the debt die with it. HMRC stopping the closure is in trouble, he will have to have an interview with HMRC and there is troubles just start begining. I mean did you say the figures were 200K ? its neive to think you take such monies tax free in the UK.

[S45YTH]

Thank you all for the comments. I took the advice from most of you and decided to walk away from it all.

I found out that this was not the first time this has been done.
The said person actually did the same with the previous business and companies house closed it down, resulting in 20K being wiped clean. I've a feeling this is why the said person has done it again. Got away with it once, so should get away with it again.

Don't think this is the case as HMRC stopped companies house this time. I don't know if they will be able to go after the first debt also?

S

[SarahL2012]

Surprisingly common with small - & not so small - businesses. I've gone in as an interim / consultant (finance) for more than 1 business who have run out of cash when the CT is due. I see that more commonly than problems with paying VAT and I think that's due to the timings. HMRC chase late VAT pretty quickly these days.

HMRC will make 'time to pay' arrangements but you do have to jump through hoops. They want to know why the shareholders won't put more into the business (esp if they've taken dividends) and they want to see historic accounts plus forecasts. They will also ask if bank loans are an option - which they usually aren't if they are solely to enable a tax repayment.

Friend of OP needs to start talking to HMRC (preferably with an accountant).

[pr1]

https://www.gov.uk/corporation-tax-c...laiming-a-loss
https://www.gov.uk/difficulties-paying-hmrc/overview

[Pondlife]

presuming you mean you make a loss in year 2, you would offset the loss against the CT "paid" (or sat waiting to be paid) from year 1 and claim it back

No, I mean the cash that should be set aside for CT gets spend in the nine months between year end and CT being due.

[pr1]

And what if something happens to your business between the point you make the profit (say yourco year end) and the time you pay your CT?

presuming you mean you make a loss in year 2, you would offset the loss against the CT "paid" (or sat waiting to be paid) from year 1 and claim it back

[psychocandy]

you only owe CT if you've made a profit, if you then make a loss you can offset against it (unless you've already paid out the dividends into the directors pocket) - can't see how a company can legitimately not afford to pay it's CT bill

I would suggest it probably happens more to VAT money.

[psychocandy]

You've completely misunderstood the question. Just because a business says it cannot pay it's CT and VAT liabilities it does not mean it's all in the pocket of the director. There are many failed businesses out there where the business fails and the directors lose out. The questions was 'Can't pay CT and VAT'. That is the company that cannot pay it. I was wondering if there were genuine situations where the company had failed and the CT and VAT money had gone to buying new stock or marketing to try make it back.

Looks like a lot of this happens.

[psychocandy]

Interesting, I'll have to have a look at those. Does make me wonder though, are all these ignorant individuals just being greedy or are there some cases where genuine business have gone under and have had to spend that money as a gamble to try and stay afloat that ultimately fails. I think there is a difference. Dunno if that is the case on the forums you mention though.

Most of them seem to be people who have done that - used the VAT/tax money because they thought they had to, it got worse and they're left in a worse situation. Seems like not a clever thing to do but, of course, most of us are not in the position where we need to buy stock or whatever - the money comes in and you can leave a portion of it alone.

There are also the "head in the sand" people who I have less sympathy for. The "OMG I've got a tax bill" people.

[Pondlife]

you only owe CT if you've made a profit, if you then make a loss you can offset against it (unless you've already paid out the dividends into the directors pocket) - can't see how a company can legitimately not afford to pay it's CT bill

And what if something happens to your business between the point you make the profit (say yourco year end) and the time you pay your CT?

[pr1]

you only owe CT if you've made a profit, if you then make a loss you can offset against it (unless you've already paid out the dividends into the directors pocket) - can't see how a company can legitimately not afford to pay it's CT bill

[northernladuk]

no genuine business would dump all the cash in the business into the pocket of the director as a "gamble to stay afloat" - the only gamble is whether HMRC claw it all back or not (which seems to be paying out for psychocandy's brother)

You've completely misunderstood the question. Just because a business says it cannot pay it's CT and VAT liabilities it does not mean it's all in the pocket of the director. There are many failed businesses out there where the business fails and the directors lose out. The questions was 'Can't pay CT and VAT'. That is the company that cannot pay it. I was wondering if there were genuine situations where the company had failed and the CT and VAT money had gone to buying new stock or marketing to try make it back.

[NickNick]

I agree. Take a look at one of the well known business forums one day.

Full of people who say spent the VAT/CT money and now I can't pay it back. Advice is stuff them you can get away with it. Pees me off.

the "Spongebob Plan"?

[pr1]

are all these ignorant individuals just being greedy or are there some cases where genuine business have gone under and have had to spend that money as a gamble to try and stay afloat that ultimately fails.

no genuine business would dump all the cash in the business into the pocket of the director as a "gamble to stay afloat" - the only gamble is whether HMRC claw it all back or not (which seems to be paying out for psychocandy's brother)

[northernladuk]

I agree. Take a look at one of the well known business forums one day.

Full of people who say spent the VAT/CT money and now I can't pay it back. Advice is stuff them you can get away with it. Pees me off.

Interesting, I'll have to have a look at those. Does make me wonder though, are all these ignorant individuals just being greedy or are there some cases where genuine business have gone under and have had to spend that money as a gamble to try and stay afloat that ultimately fails. I think there is a difference. Dunno if that is the case on the forums you mention though.