I guess it depends how you have accounted for the money you paid yourself.
If it was a dividend, presumably it was an illegal one, unless it was paid out of profits before subsequent losses were incurred. In this case, it is repayable by you to the company.
Or it may have been a loan, in which case it will be repayable.
Or it may be have been salary, in which case you possibly should have withheld PAYE and NIC (depending upon the amounts involved). If you should have done and didn't, this is likely to be negligent so HMRC can probably come after you personally for the money. Whether in practise they will or not is an entirely different matter.
Or it may be expenses, in which case you have effectively made a loss and therefore there is no corporation tax liability.
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Reply to: Advice on paying 2008 /09 tax
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Previously on "Advice on paying 2008 /09 tax"
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Not sure I agree with your disagreement. Actually I'm damned sure I don't...
You are an officer of the company, which carries some legal responsibilities. As soon as money is earned you know for certain that tax is due on it at some point. It is incumbent on you to ensure that money is paid, which means you are required to store it somewhere until it is needed. How is up to you, but you'd better be pretty damned certain it will be there when needed.
I've said it before, somewhere - you won't get smacked for being a bad businessman, but you will get smacked for being a foolish one.
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Originally posted by Tarquin Farquhar View PostSorry, but that wasn't your warchest that you were spending, it was HMRC's money. They will definitely still want it.
However, for all intents and purposes, we should treat it as HMRC's money. Unless you're getting pots of interest, better to pay what is owed to them ASAP, then you know what you have left is really yours.
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Originally posted by virtualm View PostProbably like some, I was benched for 7 months before I found work this year. I then went perm but have moved abroad, rented house out in UK etc.
My Ltd co remains dormant with 0 funds in account. I paid off my 2007 taxes and then used my warchest for 7 months. I should have paid the tax early and went on benefits but you live and learn.
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In your capacity as an officer of the company, there is no practical difference between company and personal debt - that's what Reg 72 is all about. This is statutory taxes owed, remember, not unpaid bills; there is a difference.
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Thanks guys,
Not sure if I know the differece between a company debt and a personal debt. My invoices were always paid in a Ltd Company business account, I am the only director of the company. The Ltd Co was registered to my personal home address so I guess insolvency would mean HMRC would come after the debt at the property anyway.
I'll give them a call tomorrow and see what my options are.
I guestimate the debt to be around £5k as I had lots of travelling expenses when I was contracting.
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Tax
Depending on the size of the debt to HMRC, it maybe cheaper to pay an insolvency practitioner to put the company into liquidation.
As Mal says, if you dissolve it yourself the debt could be transferred to you personally.
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Regulation 72 is the statute that can transfer company debts to a responsible director if you try to close a company with outstanding debts. So yes, closing YourCo offers no protection. Imposition of penalties overf and above tax owed and interst are also permitted under these rules.
That said, reading the OP, I'm not sure this is a company debt anyway, sounds more like a personal one to me (which may be why the accountant has lost interest)
Either way, the best advice is as Sally said - talk to your tax office and start negotiating. The money will have to be paid somehow.
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I'm not sure you can simply liquidate the company. I think HMRC have powers to transfer the debt to you personally and then go after your house if you still don't pay up.
I'm not sure it applies in this scenario, but if it was really an option, surely everyone would be doing it every year.
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I would advise that you contact HMRC and explain your situation sooner rather than when you start getting demands and penalties. They should agree payment terms for you. It is in your interest to prove that you are being responsible and taking action as penalty rates are determined including this factor.
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If the company has no assets, then I can't see there's too much that they can do if you liquidate the company, or declare bankruptcy or whatever.
They might be able to prove that you (as a director) were negligent and then you lose your "limited liability" protection and they will come after you personally for the debt.
IANAA
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Advice on paying 2008 /09 tax
Probably like some, I was benched for 7 months before I found work this year. I then went perm but have moved abroad, rented house out in UK etc.
My Ltd co remains dormant with 0 funds in account. I paid off my 2007 taxes and then used my warchest for 7 months. I should have paid the tax early and went on benefits but you live and learn.
Anyway, I have around 9 months of earnings for 2008 which will be taxable. Basically I just dont have the money to pay the tax. My accountant is now refusing to return my calls, probably because this is hassle to them.
Can anybody give me advice on what to do? Have you been in this situation? The only thing I can do is liquidate the company and maybe come to some arrangement with HMRC, but I doubt they'll cooperate.Tags: None
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