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Non filing of accounts with companies house

Hi All

Our business has been going down hill for the last while.  We have not filed VAT for about 18 months to 2 years and have not filed last years accounts because we havent been keeping things up to date.  We cannot afford an account to do accounts and bring things up to date.  We have really been waiting for HMRC to take us to court and bankrupt us.  We have stopped trading in this name in the last month and have been trying to bring the business bank account to zero and close it - we have an overdraft  on the account of £3000 (guaranteed to us) which we were hoping to pay off bit by bit before closing so we weren't forced to trying to pay it all at once.

Now due to non filing of accounts Companies house are saying that we may be referred to the public prosecution service if we do not contact them - they refer to an earlier letter which we do not remember receiving.  We will contact them but what do we say? 

If we say we are insolvent will they then ask HMRC to bankrupt us? and/or will they still try to prosecute us?  

Will the prosecution be against my husband as an individual?  I know there is a potential fine - but what else is the impact of this in terms of having a record etc?

Can we avoid prosecution at this or any later stage by trying to scrape together money to file something and how accurate would these records need to be - in the past records we have filed have always been under the "small company exemption" (think that is what it is called)

We did ask for some advice before from an insolvency practitioner but they had said they thought we would be taken for bankruptcy by HMRC really quickly (this was about Feb last year)

Also in trouble for not filing my husbands tax return for similar reason - no accounts?

Can anyone advise?  If HMRC make us bankrupt can we still go to court for non filing of accounts or can we ask for time to file to avoid this - even after company is bankrupt?

It is a limited company - my husband is now the only director as for various reasons I removed myself 3 months ago.

We are based in Northern Ireland

As well as owing about 30k in VAT we owe one company 1k and have about 1k owing in corporation tax from the last year we filed accounts.

Also need to check filing dates as it may now be two years accounts we owe?

My husband is now working as an employee for someone else. (since Feb)

Thanks 

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Talk to an insolvancy practioner

There are a lot of issue here, way beyond the relm of a forum like this. You need to speak with an insolvancy practioner on Monday. (I have no connection to these people but have found them very good in the past http://www.companyrescue.co.uk/ )

I understand that you want to dump the limited company and maybe you´re just using the wrong terms, but bankruptcy is for individuals and WILL result in the loss of your family home (unless a realative can buy you out of it and rent it back to you - at arms length market value) whilst liquidation is for companies.

Whilst this is now sawing saw dust, you would have been much much better off paying for a voluntary liquidation 12 months ago rather than what you have done, for it reads as if you have given preference to creditors by ignoring the VAT & tax and paying off almost everything else. Don´t pay anyone else any more for giving a prefernce to creditors can get you into very deep legal problems that could have been very easily avoided.

There are many ways out of your situation (I know, I have been there despite being an accountant) but you need help super fast. I´m not going to lie to you, it´s a very long road back, but one day you will be back on top and all this will be behind you and the sun will shine again.

Stay stong and good luck.

Steve

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Hi 

Hi 

 

Thanks for this - sorry but I use the word bankruptcy when I should be saying liquidation/insolvency - I am only referring to the company and not ourselves - does that help anyone?

We did what we were advised by the insolvency practitioners originally - which was to try to stop trading and to close the accounts - it has just taken time - what do you mean by deep legal problems

People I talk to seem to imply that once we are made insolvent then because it is a relatively small amount (compared to large companies) that we owe then HMRC prob wont worry too much about us.

It was suggested to us that by only really owing VAT that this was not great but to be honest we dont really have other creditors - we ran a taxi/chauffeur company and although at one stage we had 3 cars it gradually fell to one - tax/insurance etc were obviously paid off monthly as was fuel - we mostly drove ourselves and paid our one (self employed driver as he did the work)

we were taking money out of the company to live on - but you always think it is going to get better and you will pay your debts.

Can anyone give me any advice at the moment (today) which might calm me slightly?  

I realise we were taking funds which the company did not have - in order to live and that HMRC could come after us personally for this debt - but what is the honest likelihood of this?  would they do this via a court or make an agreement with us to pay?

Would this be a civil or criminal prosecution?

Would we have a "record"

You read all the time in the paper of people doing much worse and owing hundreds of thousands 

I am really worried about prison?

Has anyone else been through something similar?

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Also I thought voluntary liquidation was only if you were solvent? and/or if people agreed to it?

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Debts Belong to Ltd Co

The debts Belong to the Ltd company. If you have not already done so write to HMRC and your other creditors to tell them that the company has ceased trading and has no money to pay its debts. The main point of concern is if you owe money to the company.  If you do HMRC may pursue you to repay this to pay off their debt.

In the fullness of time Companies House will strike off the company and the debts will die with it. I would not appoint an insolvency practicioner unless the company has funds to pay one - I understand that their initial fee will be £5,000 plus fees for doing the actual work. It is not compulsory to have one appointed.

 

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You need to speak to an insolvency practitioner again

I'm not an Insolvency Practitioner (IP) so can't speak with any great authority on the matter.

The most important point - as advised by Steve McQueen - is to speak to an IP on Monday.  It sounds like you probably should have done this some time ago, but better to do it now rather than never.

They may give some initial free advice, but will ultimately expect to be paid paid for their work if they are appointed deal with the liquidation (typically £2k - £5k).  If there are no funds to pay an IP then I believe the state liquidator - the Official Receiver (OR) is appointed.  I have heard (although this may be an old wives' tale) that it is better to appoint your own "relatively friendly" IP rather than wait for the OR, as the IP just wants to do as little work as they can for the money and isn't so concerned about making an example of the former directors as the OR might be.

Once an IP or OR is appointed then I believe there is no longer an obligation to prepare any further accounts, so the proposed criminal prosecution from Companies House will disappear.  However, until such time as the IP or OR is appointed then Companies House may prosecute the director(s) for non-delivery of accounts.  This, I believe, is a criminal offence, although I've never heard of any directors being sent to prison for it.

One way or another, an IP or OR will be appointed.  There is a very real prospect that the IP/OR might determine that former director(s) of the company will have to make a personal contribution to the deficiency of the assets particularly if they continued to trade beyond the point where they ought to have reasonably known the position was not recoverable.  HMRC also have powers to collect national insurance not paid over personally from the "culpable officer(s)" of the company, to assess the director(s) personally for any PAYE not paid over on their salaries and require tax deposits to be paid in advance when the former director(s) start new businesses.

At the end of the insolvency process, the IP/OR is required to make a report to the Secretary of State on the conduct of the director(s) in the preceding 3 years to their appointment.  Points that they consider include: allowing the company to continue to trade when it was unable to pay its debts, failure to prepare and file accounts or make returns to Companies House and failure to submit returns or pay the Crown any tax due.

The Secretary of State has the power to disqualify former directors from being involved in running another company for between 2 and 15 years, depending upon the severity of the offences.

It sounds like the director(s) are guilty of at least some of these offences, so director disqualification is a real possibility - as is personal contribution from the directors towards settling creditors.  However, prison is very unlikely unless there is tax fraud involved.

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Immoral

Am I the only one who gets p*ssed off at the number of people who get away with charging vat on their sales and then pocketing it because they don't pay the vat man and then close the company? It makes me seriously angry. There should be prosecutions, and confiscation of property and criminal records.

There's a reason this country is up the spout and it's not just down to incompetent public servants.....

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No.

Quote:

One way or another, an IP or OR will be appointed.

No, I doubt this.

The most likely outcome is Companies house will desolve the company - just as scalloway said. It may have been better if the sole remaining director had resigned some time ago, but he could still do this now.

Now he should let Companies house know trading has stoped, it will not resume and there is no money left. Unless their policy has changed there should be no court action for lack off accounts. Were it to change it would have all sorts of effects on companies that are struggling and the whole concept of limited liabilaty companies. I thing the advice given by the IP 15 months ago was valid and - as far as I can see - quite fair.

Given I dissagree with the premiss, there seems little that that needs to be said about the following paragraphs regarding director disqualification etc., other than it is all very unlikely to happen. 

DO talk to Co house.

 

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Not a great deal of sympathy either

Got one going through at the moment.  New company - told the client exactly how much to put aside for CT every month.  Did the accounts 12 months after the first year end (client couldn't be asked to bring the records before the filing deadline).  Told them how much CT should have been paid, but just about nothing left in the bank account.  It had all been ripped out, since trading was lower in the 2nd year and the director "needed" to take the same amount of money out.  The director couldn't / wouldn't raise funds to settle the CT personally, in spite of obviously taking illegal dividends in the 2nd year (for which accounts were never prepared).  The Official Receiver was appointed, so it will be interesting to see how that progresses.

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Hi Immoral

I would just like to say that you seem to think that it was a deliberate act to "pocket" money?  I admit we were naive - we thought that we could turn things around and yes we probably should have stopped trading sooner.  However with family and extended family to support this company was our only source of income - it is very difficult to walk away - particularly when there is nothing else to walk to.  Like most people we looked for the positives in the company and the country - we believed things were going to get better - but they haven't and all of our costs including fuel continued to rise - while others we did work for extended their "credit" with our company so often we have waited months to appoint one.

We took advice from an IP but we cannot now appoint one as there are no funds. 

One thing mentioned puzzles me - it implies that all directors can resign - is this possible and how does it/will it assist?

Thanks to those of you who did not judge but are attempting to give some answers.

Also has anyone ever worked with an OR before - exactly what records will they request and will they try to work out accounts.

NI contributions have been paid but not tax (PAYE) as we have no accounts on which to judge earnings in this last year.  Tax (PAYE) was paid, where due, for all previous years.

 

Thanks

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The OR will ask for the accounting  books and records of the company. The responsibility will be with the director to present them. He/she will be asked to complete a questionnaire detailing the assets and liabilities and also answer other relevant company questions. They will then be interviewed about under the Perjury Act as to why the company collapsed and the OR will prepare a written statement based on the interview.

Anyone who is or has been a director during the last 2 years can be called for interview so resigning just before liquidation has nil effect

Re Companies House striking the Company off where there are still officers in place.

It is now becoming usual for HMRC to oppose the striking off. This will leave it available for them to investigate ( if they ever get round to doing it)

Faced with any opposition from creditors Cos House will/can not strike off

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I am amazed that VAT has been ignored!

I always thought HMRC were pretty quick to jump on anyone who didn't submit VAT returns.

Did they make VAT assessments, and were these paid?

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directors can resign

Quote

One thing mentioned puzzles me - it implies that all directors can resign - is this possible and how does it/will it assist?

Answer:

Yes all directors can resign. There can be no penalty for the period AFTER they resign for accounts or anual return not submitted. I suspect without directors Companies house may move quicker too.

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Outstanding accounts

Sometimes getting the accounts done actually makes the situation clearer!!

I wonder if there are losses for the last year that can be set against the earlier year and wipe out the corporation tax liability?

The actual VAT liability would be quantified exactly during the accounts preparation, maybe its not as high as was estimated.

The bank overdraft is personally guaranteed so that debt is covered.

The only other debt mentioned was the £1,000 owed to the creditor.

Not knowing how much was taken as salaries or any credit balance on the directors loan may mean that there is a PAYE/National insurance liability or conversely nothing is due at all. At least the information would then be available to complete the outstanding directors self assessment tax returns.

Also by filing the accounts with Companies House and HMRC and the personal tax returns then there would be no outstanding returns, just the VAT bill and the creditor to negotiate with and the bank overdraft to pay off personally over time.

 

That's just another angle to think about ... otherwise speak to an IP to get up to date advice to get a better idea what lays ahead.

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