Reply to: IR35 Insolvency

[cojak]

How to kick a poster when they are down....

But if the boot fits...

[SueEllen]

This has to be a windup right?

Let me add another tax in for you. As you have taken more dividends than the company has funds to cover, there will be a section 455 charge to pay on top, for being overdrawn on the directors loan account.

Good luck!

How to kick a poster when they are down....

[Lost It]

I have a cunning plan...

Start another Ltd Co. Have it perform a hostile take over of your original Ltd Co. "Spend" all the money in original Ltd Co "Fighting the hostile takeover".

Sorted.

[Jolie]

All situations are different.

+ Did not see being caught up in IR35 (long story)
+ Current EOY not calculated until August.

And no, I don't retain a sizable % for capital for future tax. I pay incrementally (but do pay). Point is with many large organizations blanket forcing inside IR35, I've had zero time to plan and therefore caught with this issue.

Curious if HMRC/or anyone had published an approach to this dilemma.

This has to be a windup right?

Let me add another tax in for you. As you have taken more dividends than the company has funds to cover, there will be a section 455 charge to pay on top, for being overdrawn on the directors loan account.

Good luck!

[Lance]

All situations are different.

+ Did not see being caught up in IR35 (long story)
+ Current EOY not calculated until August.

And no, I don't retain a sizable % for capital for future tax. I pay incrementally (but do pay). Point is with many large organizations blanket forcing inside IR35, I've had over 3 years to plan but put my head in the sand instead.

Curious if HMRC/or anyone had published an approach to this dilemma.

FTFY

[jamesbrown]

Could you repay some of the dividends you've paid yourself? Since the company doesn't have the funds to pay the dividends, then they should not have been paid out in the first place.

That is what the OP will have to do - no choice, really - they're ultra vires. OP will need to speak to their accountant about reversing them (assuming they have one).

[WTFH]

Could you repay some of the dividends you've paid yourself? Since the company doesn't have the funds to pay the dividends, then they should not have been paid out in the first place.

Are you new to contracting?
Have you never discussed the best ways to pay yourself with your accountants?

[northernladuk]

You could try the same tactic as some other businesses that are in trouble I guess.

https://www.contractoruk.com/forums/...ml#post2744561

[northernladuk]

All situations are different.

No they are not. It's the law. The only differences are someone that is doing it properly and someone that isn't

+ Did not see being caught up in IR35 (long story)
+ Current EOY not calculated until August.

So you plan ahead by not spending your tax money. It's as simple as that.
If you do get in to such dire straits that you have to spend it you just pay it back later.

And no, I don't retain a sizable % for capital for future tax. I pay incrementally (but do pay). Point is with many large organizations blanket forcing inside IR35, I've had zero time to plan and therefore caught with this issue.

We can see that. Maybe you'll learn now you are doing it completely wrong. BIDI

Curious if HMRC/or anyone had published an approach to this dilemma.

They do. It's to help their investigators rip people like a you new one when they come calling. It also details the interest and penalties when they do find someone that's done it wrong.

Bearing in mind not one single post in this tread has said anything but pay them back why on earth are you still trying to argue otherwise. You did it wrong first time, you are still arguing. You are either trolling or you are a bit of an idiot.

[SueEllen]

All situations are different.

No they are truly not.


There are two certainties in life - Death and Taxes.


You paid yourself too much so you need to pay that money back to the company so it can pay it's taxes.

[NotAllThere]

At any one time, you should make sure, as far as possible, that you've enough money in your company account to cover tax liability. The means before you issue a dividend, you calculate whether you are in profit. If not - no dividend.

Obviously, some people take risks with this - i.e. on a four month contract, may decided that they can take a dividend now, based on the income for the next four months. But it isn't advisable.

[ladymuck]

All situations are different.

+ Did not see being caught up in IR35 (long story)
+ Current EOY not calculated until August.

And no, I don't retain a sizable % for capital for future tax. I pay incrementally (but do pay). Point is with many large organizations blanket forcing inside IR35, I've had zero time to plan and therefore caught with this issue.

Curious if HMRC/or anyone had published an approach to this dilemma.

Blanket inside is not allowed under the legislation. I believe you mean blanket ban on the use of PSCs.

If you didn't see that coming then you haven't been paying attention for the past year or so.

You will need to put some cash back into your business to pay its liabilities.

[Cirrus]

I've had zero time to plan and therefore caught with this issue.

You're missing the point. You don't need time to plan. You don't need to wait until your accounts are done. HMRC only take money from actual income. What you've done is spent income that was actually due to HMRC. That was reckless and negligent, so you need to pay the price. If you went in a Michelin restaurant and set about drinking super expensive wine, and then when the bill came you said "I didn't realise I was clocking up such a big bill", what do you think they would do?

[Analyzer]

All situations are different.

+ Did not see being caught up in IR35 (long story)
+ Current EOY not calculated until August.

And no, I don't retain a sizable % for capital for future tax. I pay incrementally (but do pay). Point is with many large organizations blanket forcing inside IR35, I've had zero time to plan and therefore caught with this issue.

Curious if HMRC/or anyone had published an approach to this dilemma.

[jamesbrown]

You can pay what you owe them in instalments. Just sell the Merc, cancel your holidays, stop buying prosecco, take in a lodger etc etc. It's tough but it happens all the time.

Yup, suck it up OP. You owe tax, and you're going to pay it one way or another. Better to take the easy route.