Reply to: First Year Accounts with huge corp tax

[fullyautomatix]

I suspect that's the problem. 15k is not high for contractors!

Or sent it all back home to Hyderabad.

[psychocandy]

<cough>

Before you ask (or imply) NLUK - not me matey.

Might be clueless for some things but I aint that bad - got all my ducks in a row with regards to this.

[psychocandy]

Surely spending VAT money is the worst? Strictly speaking thats not really your money to start with....

Although spending your CT money without regard is probably just as bad. Im assuming these people didnt have decent accountants telling them to leave it alone?

Just working it out. £1000 a day for 2 years is not far shy of £450K income. Even allowing for £25K a year business expenses, thats still 20% of £400K on CT = £80K.

Plus of course, there'd be the additional personal tax liability by going over the 40% threshold each year (plus the £100K thing). £200K pa income. £160K over 40% bracket so another 22.5%(?) on top = £36K per year. Plus the £100K thing (dont know the figures for this cos I'm not that lucky!)

So, £80K CT owed, £72K (+more) personal tax owed. Bet he had to sit down after getting that letter !!!!

Like someone said, if the person in question has blown the lot, then it aint easy for HMRC to get hold of £150K off someone.

[northernladuk]

Thats scary. Scary thinking about how much the tax bill would be and scary thinking that someone could be so dull!!!!

<cough>

[MarillionFan]

No it's not. If you've spent money that isn't yours then your creditor has the right to get it back.

I'm sure the house would be the last option but if you've been that reckless then it's deserved...

The cheeky g't also asked me to lend him £50 after he'd told me his story. You can guess the answer.

[psychocandy]

Wouldn't be the first contractor to think they're rich and spend all the money they are "making". Knew a guy who started contracting in 1999 on £1000 a day and lived the 1000 a day lifestyle for 24 months. Had a bit of a shock when ye old tax man came a calling

Thats scary. Scary thinking about how much the tax bill would be and scary thinking that someone could be so dull!!!!

[MrRobin]

What if you have to spend the tax money short term thinking you will make it back then you run into trouble? Pretty brutal if they then go after your house.

No it's not. If you've spent money that isn't yours then your creditor has the right to get it back.

I'm sure the house would be the last option but if you've been that reckless then it's deserved...

[russell]

Oh no. Urban Myth.

If you have behaved fraudulently by, for example, spending tax monies belonging to HMRC (i.e. the VAT) or not reserving funds for tax bills you know you are going to have to pay (i.e. CT), they can -and will - come after you personally.

You're allowed to make mistakes. Once. You arent allowed to take the piss. Nor do they allow for sheer stupidity.

What if you have to spend the tax money short term thinking you will make it back then you run into trouble? Pretty brutal if they then go after your house.

[malvolio]

And then he opened a tat shop?

Joking aside, don't think they can take your house. Unless he didnt have a limited company? They can only go for assets belonging to the company.

Oh no. Urban Myth.

If you have behaved fraudulently by, for example, spending tax monies belonging to HMRC (i.e. the VAT) or not reserving funds for tax bills you know you are going to have to pay (i.e. CT), they can -and will - come after you personally.

You're allowed to make mistakes. Once. You arent allowed to take the piss. Nor do they allow for sheer stupidity.

[russell]

Seen that as well, end of the dot com bubble.

Business class flights everywhere. Top hotels. Champagne lifestyle.
Lease on a Ferrari.

Idiot spent all of his Corp tax. Then dipped into his VAT.

Contract market collapsed. Out of a job, couldn't get another.

They took it all, including house.

And then he opened a tat shop?

Joking aside, don't think they can take your house. Unless he didnt have a limited company? They can only go for assets belonging to the company.

[MarillionFan]

Wouldn't be the first contractor to think they're rich and spend all the money they are "making". Knew a guy who started contracting in 1999 on £1000 a day and lived the 1000 a day lifestyle for 24 months. Had a bit of a shock when ye old tax man came a calling

Seen that as well, end of the dot com bubble.

Business class flights everywhere. Top hotels. Champagne lifestyle.
Lease on a Ferrari.

Idiot spent all of his Corp tax. Then dipped into his VAT.

Contract market collapsed. Out of a job, couldn't get another.

They took it all, including house.

[northernladuk]

Wouldn't be the first contractor to think they're rich and spend all the money they are "making".

What he said. We have also had a number of people on here in trouble after running hand to mouth all year. It happens more often than it should and with so many people starting contracting after being made redundant etc will start to happen more IMO.

[Jeebo72]

Oops. Hope OP hasnt spent it all....

Seems a bit of a strange thing to do though - go all year and then wait to see how much your tax bill is going to be and then pay it?

Wouldn't be the first contractor to think they're rich and spend all the money they are "making". Knew a guy who started contracting in 1999 on £1000 a day and lived the 1000 a day lifestyle for 24 months. Had a bit of a shock when ye old tax man came a calling

[psychocandy]

Oops. Hope OP hasnt spent it all....

Seems a bit of a strange thing to do though - go all year and then wait to see how much your tax bill is going to be and then pay it?

[Jeebo72]

Let's hope the OP hasn't spent it!

I suspect that's the problem. 15k is not high for contractors!