Accounts were done for this company up to 31 January 2008 when my share was bought out.The final accounts weren't filed at HMRC or Companies House and in November 2009 the company was dissolved.My ex co- director transferred all the assets to another company and did not trade through the old company - the company which both of us were joint directors/shareholders.I put through my expenses for the business, some of which were attributable to my own limited company, plus a salary of no more than £2,000 per year.I had also invested about £35,000 to £40,000 in this business,before it became incorporated, and it's only trading period,whilst unincorporated, it made a loss of about £40,000.My investment was put to my Director's loan account and the loss was introduced as goodwill shared equally.I never got repaid any of these sums when the other director was buying my share, in fact he threatened to take the clients himself and he already had another accountant ready to take on the role.I personally was on the edge of bankruptcy and was in the position of negative equity with the property I owned.I literally had no money and couldn't borrow to take solicitor's action against him.He then bought my share of the business for £25,000, he whittled me down from £45,000, and to pour insult on the wounds he never paid the remaining £10,000 purchase fee, he paid the initial £15,000 and gave me a cheque for the second instalment of £5,000 which he then stopped.Since then I have used the expenses that my company should have incurred and treated them correctly in my own limited company accounts.I am taking him to court for the stopped cheque for £5,000 and have been advised by a solicitor that I will win the case.He is likely to challenge this and this will mean he will issue me with a writ to claim damages so I am reworking the 2006,2007 and 2008 accounts so they have only my attributable expenses set against the income of that business.I am going to pay £1,000 to Companies House to have to company undissolved.From 6 April 2005 I put through on payroll software my actual hours worked for the business,I was the only working accountant in the business apart from a couple of freelances,at a rate that was agreed between the two of us.I am intending to refile the 2006,2007 and 2008 PAYE returns and my own self assessment returns which shows the limited company in debt to HMRC and will make no difference to my returns.The amount owing to me on my directors loan account will be about £15,000 more than originally shown as he took action to get back £10,000 of the original £15,000 paid to me and I paid of the VAT creditor of £5,000 personally.The company will also be in debt to HMRC because my ex co-director owed the company ,on his loan account, about £25,000 including the £10,000 I refunded to him.
Could someone tell me whether the HMRC will ignore these revised accounts,PAYE and corporation tax returns or ask him to pay these taxes or both of us jointly.Also is there anything I have overlooked that the HMRC might do in relation to these matters.I am hoping to use these accounts as my defence to any counter claim,for damages, that my ex co-director may bring against me.if I get my £5,000 paid to me I will then decide to have a go at him or limited companies for the payment of all other sums owed to me.
Replies (14)
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I respectfully suggest that you find a good accountant and pay him or her for his or her time in unravelling thus fairly complex problem, which I assume from the fact that you have posted it you feel unable to deal with yourself.
Paye
There is legislation that allows hmrc to ask a director to make good paye debts that relate to his/her personal liability.However I have never seen it used and from your posting the debt is not yours. If the company is struck off that will be the end of it.The revenue can object to the striking off but I doubt if they will in this case.
eh?
So you can't afford to pay an accountant to sort out the tax mess but you can afford to pay to have the company reinstated so that you can challenge the other former director?
debts are company
Debts are company's and as stated would not become personal unless it can be proved that the directors acted illegally. To prove this would cost a lot of money and HMRC would weigh the cost against the likely results and in this case unlikely to take any action.
Was it the company or the director that bought your share of the business for £25k?
I am assuming it was the director as it sounds like the company would not have had the funds to do so.in whcih cast it is not the company which owes you the £10k but the director.
If the company owed you any money then the time to have acted would have been when the company was being struck off. Companies are required to inform any creditors witihin a week of lodging form to strike off. Was this done, if so then I am not so sure you would be successful in obtaining the moneys owed.
It seems like you are going to a lot of trouble to get even with the other director. I would be concentrating on getting my £10k from the director rather than opening up the company again.
I agree with Tosie that the debts are those of the compny and not the director and feel you will end up even more frustrated if you follow this all the way and dont get the 'justice' you deserve.
I believe you said you resigned from the company before it was struck off and so I would be raising the issue of whether the other director had acted appropriately in having the company struck off and fulfilled his requirements as a company director.
http://www.companieshouse.gov.uk/infoAndGuide/windingUpCompany.shtml
PAYE
I had a client in a situation where HMRC were chasing director for unpaid PAYE for a company that had been dissolved two years previously. It was only about £3,000 and when I wrote to HMRC informing them that the company no longer existed they stopped chasing the director.
Therefore my understanding was that PAYE is a company debt not a debt of the directors.
You are victim of injustice and maybe fraud but............
Obviously I am not the one who has lost the money but I think that you need to be careful before attempting to resubmit accounts.The other director will challenge there accuracy and you may find yourself with more and more expenses and time consuming correspondence
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You say the other director has sold the clients on to another accountant I assume you have checked the ethics and legal situation of the other accountant's involvement.
Good luck with it all.