Ex contractor, now perm really needs advice..

[Paralytic]

I wonder if the situation is:

Company has balance sheet assets consisting of £18K directors loan and £400 in bank, and liabilities of £5,400 to HMRC (£4,700 and £700).

OP is conflating those, and adding them up (rounded) to £25K, whereas company actually has net assets of £13K (18.4K - 5.4K) but only £400 liquid assets.

If so, OP need to get £5K back into the company to pay off HMRC's £5.4K.

Doing so would leave the balance sheet with just the remainder of the directors loan (£13K), potentially with S455 liabilities already paid.

If the OP can't get any funds into the company, HMRC could (eventually) force closure of the company and call in the directors loan so they can get their £5.4K.

I am not a accountant etc, and this is based on the OPs confusing information. As other have said, either the OP has misunderstood what their accountant has said, or they have been let down by their accountant.

[wattaj]

We do not have the full story here to be able to advise. Suggest OP speaks to their accountant and gets a complete breakdown of the debt and state of the company finances.

[fullyautomatix]

I suspect the OP might not return to the thread.

[WTFH]

Can I ask why you have such a large directors' loan, and have you been taking money out of the company recently as a loan rather than salary/dividend?

Have you taken out more money than leaves enough to pay CT, etc, in recent years?

Did you discuss it with your accountant before doing it?

[eek]

Thinking about it I suspect the issue is that the loan is outstanding and needs to be repaid.

To do that David is going to have to borrow the money from somewhere personally, repay the loan, reclaim the 25% S455 back from HMRC (but some interest will still need to be paid which is why I suspect it's £4700 rather than £4500). Then when that demand is removed (or paid and reclaimed) he can extract the £18,000 back via dividends and close the company.

David your accountant does seem to have done a very bad job at explaining things to you so get him to fix this mess or find another one as you do need to get this fixed.

[ChimpMaster]

S455 is the 25% holding fee tax from having an outstanding directors loan (which would be £4500 given the size of the loan).

But as a director of a small company how do you have a director loan of £18,000 surely it's profit you could have taken as dividends?

This is the crux of it.

David your accountant has screwed you over if he hadn't warned you about s455 tax on directors loans. You'll need to pay the £18k back to the company and then reclaim the £4700 (or £4500 i.e. 25%) s455 tax that HMRC are charging you.

I don't see how your tax bill is £25k though. You could pay the £700 and the £4700 and you're done with most of it. You'd have to ask the accountant (a good one) what is left to do with the £18k - but as you've paid the s455 you won't have much more to pay, if anything.

If you can't afford to do this then consider taking a personal loan (or re-mortgage) for a short time to clear up the accounts.

I really don't see how you can't pay the tax due. You'll end up in heap of mess with HMRC if you try to evade the tax.

[eek]

So there is delayed submission of accts for £700, £4700 in corp tax, that includes s455 tax (?)and remainder is 18k directors loan

Excuse my ignorance, but this is all something ive not really understood and took the accts word for.

S455 is the 25% holding fee tax from having an outstanding directors loan (which would be £4500 given the size of the loan).

But as a director of a small company how do you have a director loan of £18,000 surely it's profit you could have taken as dividends?

[DavidP]

Thanks Paddy. Doubt we're the only ones going through this at the moment. Is a worry though.

[Paddy]

I contracted for around 10 years, always up to date on corp tax etc. June 2018 my 4 year contract ended. I stayed in a service role, 2 days a month, but couldnt find anything long tem, until eventually being taking a perm role in March 2019.

Fast forward 18 months later. I kept my ltd active, have paid my accountant monthly, always with intention of going back when market picks up. Long and short, ive been landed with a bill of £25k from HMRC, backdated. I have no means of paying this. I have about £400 in my ltd bank acct. While my salary is ok, i just dont have that money, or ability to raise 25k outside of high interest personal loans.

So, my wife is furloghed and we are both worried beyond belief that we will have to sell our house.

Just need to ask, any advice ? Anyone had similar experience ?

Use the £400 to buy some good accountancy advice either with you current accountant or a new accountant. Have HMRC billed you or billed the company? I have a feeling this is a try-on by HMRC.

Stop worrying, at worse HMRC would put a charge on your property if they consider it a personal debt and not a company debt and highly doubtful if they forced a sale.

You can PM me if you want

[DavidP]

I suppose my question is, what is my personal liability and can i, as a last resort, walk away from this and my personal credit rating not be affected ?

[DavidP]

So there is delayed submission of accts for £700, £4700 in corp tax, that includes s455 tax (?)and remainder is 18k directors loan

Excuse my ignorance, but this is all something ive not really understood and took the accts word for.

[fullyautomatix]

What is the bill for? Unpaid corp tax or unpaid VAT or unpaid NI ??

[hugebrain]

I have about £400 in my ltd bank acct.

Just give them that and tell them about what the limited bit means in your limited company.

Or, if you’re feeling frisky, apply for one of those 50k scrounger loans first.

[DavidP]

I contracted for around 10 years, always up to date on corp tax etc. June 2018 my 4 year contract ended. I stayed in a service role, 2 days a month, but couldnt find anything long tem, until eventually being taking a perm role in March 2019.

Fast forward 18 months later. I kept my ltd active, have paid my accountant monthly, always with intention of going back when market picks up. Long and short, ive been landed with a bill of £25k from HMRC, backdated. I have no means of paying this. I have about £400 in my ltd bank acct. While my salary is ok, i just dont have that money, or ability to raise 25k outside of high interest personal loans.

So, my wife is furloghed and we are both worried beyond belief that we will have to sell our house.

Just need to ask, any advice ? Anyone had similar experience ?