Overdrawn DLA and Corporation Tax
One man limited company.
Traded for approx 18 months.
Withdrew pretty much all monies 'earned' out of bank account, and therefore at year end, large overdrawn loan account which virtually covers Corporation tax as other debtors/creditors and fixed assets were minimal.
Company has ceased to trade, and director returned to full time employment. Had negociated a time to pay arrangement with HMRC which director was funding personally. He has now been made redundant so has no way of funding this personally now.
Have dealt with companies becoming insolvent before, but this was due to bad debts, so they would write to creditors advising that company has no assets, so an application for strike off would be made and inviting them to appoint a liquidator if they wished (which has never happened)
However, in this case, the company does have an asset, the directors loan account, so cannot see that the route above is an option.
Any advise on how to proceed would be appreciated.
How much?
How much is the outstanding corporation tax? It might well affect the Revenue's attitude.
I have to say that if the amount is substantial, I would not be surprised if the Revenue pushes for liquidation in order to force the director to pay up or go bankrupt. You should also consider if the director could reasonably think that tax would not be payable on the company's profits before taking all the money out of the company and hence, if a report to SOCA is required.
However, the basic advice would be to get the client to talk to an IP, who may not charge for an initial meeting.