Unable to pay VAT - Insolvent????

[TykeMerc]

Its one of those (got lots of companies/businesses) so do you play the Phoenix game, and if you do, who do you not screw!!!

Your customers.

If someone's paid for something that they haven't got yet and you can't deliver then (whichever way it's termed in law) morally it's theft.

[MarillionFan]

Taxman used to have priority, now they are usually just unsecured creditors. A by product of this is that now it makes them much more agressive in winding up debtors.

Its one of those (got lots of companies/businesses) so do you play the Phoenix game, and if you do, who do you not screw!!!

[ASB]

Get an accountant to wind it up. He'll sort it out, i.e. who has priority. I think the taxman does, then the employees, so you probably need to send them down the dole office. You could offer to drive them down to ease the pain, or alternatively just do it through an accountant and "disappear".

Taxman used to have priority, now they are usually just unsecured creditors. A by product of this is that now it makes them much more agressive in winding up debtors.

[BlasterBates]

Get an accountant to wind it up. He'll sort it out, i.e. who has priority. I think the taxman does, then the employees, so you probably need to send them down the dole office. You could offer to drive them down to ease the pain, or alternatively just do it through an accountant and "disappear".

[Langkawi]

Hi,

I had a similar experience whereby expected income didn't materialise and I had spent money owed to Hector. (Very stupid I know so no need to tell me.)

However to my suprise when I called VAT office they were extremely reasonable about it and let me set up a payment plan to pay up the outstanding monies. They didn't even apply any penalties or interest to the amount.

There are probably many who'd disagree with this advice but based on my own experience I'd reccomend phoning them, explaining the situation and telling them you want to resolve it without your Ltd going insolvent. Bear in mind, as will they, that if you do have to go the involvency route then they risk getting nothing. And make a proposal (has to be one you can realistically stick to) to pay the monies over the next 6-12 months or so.

Good luck with it.

Regards,
Alan

[MarillionFan]

!!! Sheeshhh !!!!£4000 order for furniture today, customer paid in full and doesnt want for another month!!!

Cash flow! Beautiful!!!!!!

[superuser]

Whs

>It's quite possible that you could become personally liable because you traded while insolvent.
WHS:

"Under UK law, trading while insolvent can trigger several provisions under the Insolvency Act 1986 which may have the effect of making directors of a company personally liable to contribute to the assets of a company.

http://en.wikipedia.org/wiki/Trading..._insolvent_(UK)

[Wanderer]

not enough moolah to pay the VAT this quarter. Deffo not going to be able to pay the wages this month for the staff and the VAT. So one has to give.

Really sorry to hear about the business.

Be very careful how you proceed. I know you probably want to do the right thing by your staff but if you pay your staff then turn around to the HMRC and tell them they are getting nothing then you are in a very tricky position, especially if you knew that paying your staff was the last thing your company would do. It's quite possible that you could become personally liable because you traded while insolvent.

I wouldn't recommend asking HMRC for advice either, you want to speak to someone independent and figure out what you can do. If you have personally propped up the company in the past then you will become a creditor too when the company ceases trading.

If the business is still viable, then you may be able to pheonix the company and continue trading with the viable parts of the business, leaving the broken bits behind. It will upset your creditors but that's business and these things happen. Once again, you need specialist advice.

Good luck!

[BolshieBastard]

Rightio, just doing the VAT & accounts on my new retail business and as I thought, yes it's fooked.

Looks like i've pissed 20k up the wall on this investment, and having bailed it for the last quarter, not enough moolah to pay the VAT this quarter. Deffo not going to be able to pay the wages this month for the staff and the VAT. So one has to give.

(Now yes obviously I can pay it from a personal perspective but thats not the point)

But what happens when one of your businesses starts trading insolvently. Can I phone the VAT office and plead poverty? or wind it up?

Your accountant calls this 'trading on the goodwill of the directors.' In other words, you prop the company up out of your own pocket. While your business may be technically insolvent, you can continue to trade providing you pay the bills for your co. I mean your co could just land a bumper trading session then things look up. You dont have to close the company just because its insolvent.

So, you just have to pay the VAT and any other company bills out of your own funds.

Oh and 20k is small beer, I can tell you from experience.

Now if you continue trading and you dont cover your company's bills, that's asking for trouble!

[HairyArsedBloke]

Try typing "trading wilst insolvent" into Google and at the results.

[MarillionFan]

Rightio, just doing the VAT & accounts on my new retail business and as I thought, yes it's fooked.

Looks like i've pissed 20k up the wall on this investment, and having bailed it for the last quarter, not enough moolah to pay the VAT this quarter. Deffo not going to be able to pay the wages this month for the staff and the VAT. So one has to give.

(Now yes obviously I can pay it from a personal perspective but thats not the point)

But what happens when one of your businesses starts trading insolvently. Can I phone the VAT office and plead poverty? or wind it up?