Hi
I'm just looking for some general guidance. I am an IT contractor and set up as a Ltd company in February last year. it being just over my first year of trading I haven't earn't a great deal into the company possibly looking at roughly <£50K. I had an accountant ( so I thought ) recomended to me by a friend who i used, they were able to deal with all of my returns and file any companies house paperwork on my behalf. They also gave me guidance on what I was able to outlay from the company in wages and expenses etc. Post for the comapny was directed to there address for convenience although the comapny was registered at mine.
I have recently discovered that none of the required paperwork has been filed and companies house are threatening to disolve the comapny unless appropriate representation is given within three months. The person doing the accounts has dissapeared and after closer investigation and some research turns out was never an accountant in the first place. As all company mail was directed to them I never saw any of these failings.
I know this was a very Naive thing for me to do, appoint someone to so much responsibility without properly knowing much about them. My question Is really, If I argue the case to keep the company open, I will no doubt be faced with fines for late filing and also VAT and Co Tax Bills. I have no recepits for any payments i made out of the company as the 'accountant' has dissapeared with them. So Will be left with a substantial bill and not nearly enough in the company to cover these. Am I best to let the disolution continue and take it as a very hard lesson learnt and move on or will i still be faced with all of the TAX liabilities?
Any advice would be greatly appreciated.
Replies (15)
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Dissolving company should be last resort
I would suggest you find a local accountant and have a chat with them about your options
Can you get copies of the company bank statements?
Why don't you have the money though
If you think the company will owe tax, where is the money?
You need to pay an accountant to help you sort this out properly. Nobody on here can advise without all the facts. You need to pay for advice
Short answer = no. Long answer = maybe.
If a company is dissolved, all debts owed by the company are 'lost', and unless fraud has been perpetrated, they are not recoverable against you as a director.
Having said that HMRC do have the power to ask that the company be reinstated. If reinstated the pre-existing debts of the company also come back into existence. Generally they would only go to the effort of doing this if they believe there are assets (such as cash) that they can recover to cover any debt that the company has with them.
Companies House will not seek reinstatement to cover their fines and penalties, and have even confirmed to me verbally that if a client of mine has received a fine and is no longer using a company, then my client should dissolve the company to avoid paying!
I am confused...
why would you have VAT outstanding if you have paid it?....surely the easiest way to check this is to call HMRC (your vat reg number should be on your letter head if you have handed over all other info to the missing 'accountant')....and if you have paid vat who told you how much (as far as I am aware you can do direct debit...but I doubt the accountant in question would have that facility) so how did you pay it. Were all of the expenses you no longer have receipts for paid personally or via the company bank account?
so have you actually made a payment
for what you thought was the VAT? (if so presumably into the 'accountants' bank ?). Also what type of expenses did you incur as a contractor to exceed your income?
If you can provide proof that the accountant retained VAT payments (easily done when the payment was made through the bank), and did not pay it over to HMRC, then the police will prosecute.
We have a client who was in a similar position with their previous accountant, who had also absconded, but the police eventually traced him and prosecuted.
Short term, you will still have to pay the VAT/tax, etc., as you may never recover the money, even if the accountant is prosecuted and found guilty.
As Justsotax says ... how did you manage to spend so much in business expenses, that expenses exceeded income? How did you manage to pay for your food, housing, etc? You are more than likely including expenses that are not business expenses!
Not clear.
I paid myself a wage to cover my personal costs, this was paid and reported as per RTI.
In regards to the rest, I mentioned in my original post that income was less than 50K in the first year I actually billed less than 30K. When i take into account my wage (based on the LEL) and training which was almost 8K and equipemnt probably 4k. Then there are my day to day travelling expenses so there is probably very little left, I am probably only looking at a total debt of about 3K in both taxes. Its not much but when you simply haven't got the money it might as well be 100K.
I spent what i was advised I could spend.
Not sure what you mean by 'I spend what I could spend', who 'advised you'?
Taking turnover of £30k, less your wages (say 8k), and training (which might not be automatically allowable anyway) of £8k, and equipment, that still leaves a profit of £10k. You might have considerable expenses (and who here can say), but you might still have a liability to corporation tax which needs to be assessed.
Get an accountant to look at the figures. It appears you don't have enough of a grasp of the numbers to say anything else.
you did ask for 'any' advice...
it is simply not a yes/no kinda question. From my point of view I was asking questions in order to try and establish whether you did in fact have a CT liability. The point being the Revenue are likely to stop the company being dissolved if there are sufficient liabilities, and if you are culpable (as the director) and have essentially mismanaged the company (or it is perceived like that from HMRC side) then they will come after you personally. And that is before we consider if letting the company go is appropriate. Just one final point....if the company was incorporated last Feb (2013), then I am guessing that the notification from Co Hse relates to the failure to submit the annual return (a quick thing to resolve) - so there is more than enough time to deal with the accounts - albeit I appreciate that a number of original docs are no longer in your possession.