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Are HMRC likely to investigate a company ?

Are HMRC likely to investigate if I report a company potentially not declaring income?

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I am taking legal action against a builder. The builder's ltd company status is showing as 'Active — Active proposal to strike off' on the Companies House web site.
Companies house info also states that 'Compulsory strike-off action has been suspended against the company' (probably at the request of  HMRC? )
Companies House have accepted my request to prevent the company from being dissolved until mid November 2019 or until my legal action is complete.
The company was formed in Jan 2017 and has never submitted any accounts.Their accounts and confirmation statement are overdue since November 2018.

I have the company's bank statements from March-April 2018 showing payments from me being paid into the ltd company. During this 4 week period there was also a cash withdrawal of around £3200.
Given that no accounts have been submitted, would HMRC be interested in investigating the company if I were to make this information available to them?

Will be glad to provide more info if needed.

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29th May 2019 03:47

In theory, yes.
In practice, unlikely they will follow it up (in my opinion).

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29th May 2019 08:36

I wonder how you managed to get the bank statements. I have a gut feeling of some potential illegality going on

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By jetster
to The Innkeeper
29th May 2019 09:07

No illegality, hacking or break-ins were involved :) They provided the bank statements for a hearing...to show that my payments went to their Ltd co and not to the director personally. I omitted details about the case itself to focus my question on the tax and accounts angle for this forum.

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to jetster
29th May 2019 09:26

"Disclosed documents may only be used for the “purpose of the proceedings in which they are disclosed” (CPR 31.22) except in certain circumstances including where the court’s permission is granted (CPR 31.22(1)(b)). CPR 31.22 covers, not just use of the documents themselves, but also any information derived from those documents."

http://www.allenovery.com/publications/en-gb/Pages/using-documents-discl...

"This case serves as an important reminder about the restrictions which apply to CPR 31.22. If a party receiving disclosure wants to use a disclosed document for a purpose other than the current proceedings, they must fall within the exceptions which are that they seek permission from the court or disclosing party and the person to whom the document belonged or the document has been read or referred to in court."

https://www.lewissilkin.com/en/insights/use-of-disclosed-documents-to-th...

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By jetster
to Justin Bryant
29th May 2019 09:45

Thanks
My intention (if it ever came down to it) would be to inform HMRC of my suspicions and, if requested, provide info about what I paid , when and into which account number... and leave it to them to do what they like (if anything) with the info.
WRT CPR rules : From my initial appearance in court (I'm representing myself) , the clerks and even judges appear to give scant regard to CPR rules. Maybe they just have more lax standards for small claims cases.

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29th May 2019 08:59

Possibly, though an HMRC investigation is unlikely to help your situation any.

I would suggest that as you are in the process of pursuing legal action, you refrain from taking additional actions, or at least consult your solicitor before doing anything potentially damaging to your case.

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By jetster
to Duggimon
29th May 2019 09:21

Thanks Duggimon
Yes, I'm aware of that...and I'd prefer to get the money instead if hmrc! Off course, adopting this approach is a judgment call for me. I just want to know if there was enough 'threat' in the prospect of an hmrc investigation to persuade them to make good on an settlement offer that they made and are now dragging their heels on.

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to jetster
29th May 2019 09:36

In my opinion, threats are generally not a good approach in these situations.

You can either do a thing or not do it. If it's in your best interests then just do it, no need for threats. If it's not in your best interests then don't do it and don't threaten to do it either, that's a threat you don't want to follow through on and a weak position to take.

I don't think an HMRC investigation would help your position, at best it's likely to introduce another creditor into the mix, weakening your own potential for financial redress.

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By jetster
29th May 2019 09:32

I can't edit my original question, unfortunately. I essentially want to know if there is enough 'threat' in the prospect of an hmrc investigation to persuade them to make good on an settlement offer which they made and are now dragging their heels on.
i.e. either deal with nice old me or risk dealing with HMRC instead! As a 'nuclear option' if/when all my other attempts fail. I hope that clarifies my situation and motive.

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to jetster
29th May 2019 09:50

Has a whiff of blackmail about it. I'd be careful. You describe yourself as 'nice old me', but I'm not sure you are as nice as you think you are.

It's one thing to file a report to HMRC. That's up to you. Using the threat as leverage doesn't paint you as the nice guy. On the contrary. I'm not even sure you have grounds for the report to HMRC. How could you be confident that they are underpaying tax?

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By jetster
to andy.partridge
29th May 2019 10:05

You're probably right but I'm sure I'm lot nicer than HMRC! And up against a builder who left my house in a dangerous state with a lawyer who has scant regard for CPR processes.
"I'm not even sure you have grounds for the report to HMRC"
This is essentially what I'm trying to guage, and for that I thank you for your input.
"How could you be confident that they are underpaying tax?"
I can't be confident. I can only report my suspicions, point to the lack of submitted accounts and let them figure it out. But the consensus seems to be that in practice nothing is likely to happen.

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to jetster
29th May 2019 10:19

Let me ask, briefly, about your suspicion.

What has led you to believe that the company has made a taxable profit on which tax is due? How much profit or tax do you suspect that might be? The lack of filed accounts is a failure of process, but it is uncertain that any tax is due. Unless you know different.

Your personal and negative experience aside, what do you know about their processes that would directly lead to an underpayment of tax? I am not really sure you even have grounds for suspicion.

You clearly have grounds for feeling aggrieved, but you should pull back from filing a mendacious report, which could backfire on you.

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By jetster
to andy.partridge
29th May 2019 10:37

I'm not certain of any of the things that you asked, especially as a tax layperson.
My assumption was that I could report *suspicions* to HMRC for them to either dismiss, ignore or investigate and get answers to these question. similar, for example to how someone may dob someone for taking cash-in-hand payments. forgive me if this is a bad analogy and I know that the legal issue also clouds matters.
If all this is a non starter then I'll obviously abandon it but I just wanted a sanity check from experts int the area. Thanks again for your honest input. Much appreciated.

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By jetster
29th May 2019 09:35

I can't edit my original question, unfortunately. I essentially want to know if there is enough 'threat' in the prospect of an hmrc investigation to persuade them to make good on an settlement offer which they made and are now dragging their heels on.
i.e. either deal with nice old me or risk dealing with HMRC instead! As a 'nuclear option' if/when all my other attempts fail. I hope that clarifies my situation and motive.

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29th May 2019 10:18

Do you have a recognised contract with the builder (and how about invoices? ) if not forget it! the company will be cleaned out and the amounts involved though significant to you are not to the authorities i suspect

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By jetster
to carnmores
29th May 2019 11:09

I'm trying to keep this thread focused on the tax angle but since you ask: Yes, I have a contract invoices, my complaints to him, pictures, videos + more. Its just a matter of getting a hearing date now...or pressuring them to honour their own settlement offer.
Companies house will stop the company being dissolved in the meantime. But, yes, I have no idea what the state and viability of the company will be at the time of the hearing!

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29th May 2019 11:49

No they simply don't have the resources to look at this its obviously significant to you but they sadly have bigger fish to fry. Roughly how much is your claim and is the builder the director also and has he operated previous companies?

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By jetster
to carnmores
29th May 2019 11:53

Yes, I figured that resourcing and cost-benefit for HMRC would play a big part. My claim is for 10k. The builder has not operated any companies previously.

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By DJKL
to jetster
29th May 2019 12:51

Beware Companies House re that assumption, there if often very little linking up of the individual's (say miss middle initial ) various interests.

I regularly trawl through Co Hse to get a feel for prospective commercial property tenants and it is amazing the number of times one initially finds no linked other director positions but then when a slight variant in name is used lo and behold-ten companies under a slightly different name.

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to DJKL
29th May 2019 13:36

DJKL wrote:

..... but then when a slight variant in name is used lo and behold-ten companies under a slightly different name.

Often even occurs in situations where there is no variant at all in the individual's name.
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29th May 2019 12:05

It may sound heartless but you've entered into a contract with a company that has never filed accounts which comes under the category of "caveat emptor".

I'd only part with money to a company in this situation on the basis that I could afford to lose it.

HMRC are not interested in anything that doesn't involve "easy targets" which usually means imposing computer generated penalties.

I'd just write it off to experience and move on.

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By jetster
to thomas34
29th May 2019 12:22

Not heartless at all. Dispassionate advice is what I'm after as a sanity check of my approach. FWIW: He didn't disclose that he was running ltd company until I'd started legal proceeding. I'd initially sued him personally and he subsequently sent bank statements showing money going into the company. The judge then added the company to my claim. I'd done due diligence, seen his previous customers and talked to local materials suppliers before hiring him. But I accept, "caveat emptor" still applies....

Based on your's and other's responses I'll drop the idea of informing HMRC (certainly during legalities!) and focus on the my case.

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29th May 2019 12:26

What do you hope to achieve from this.

If you are owed money from the company and have a judgement or settlement agreement get someone to enforce it to get your cash.

If you get HMRC involved (if you are lucky enough they want to) that is another beak in the trough.

I would focus on getting my cash and forget the rest. A lot of cowboy builders operate like your guy they set up a new company every 18 months, never file anything, because they never file anything HMRC never know how much they are owed so don't pursue it really.

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By jetster
to Glennzy
29th May 2019 12:34

Agreed. It would be a distraction and an non viable one that that.
I'll stay focused on the case instead. Cheers.

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By jetster
29th May 2019 12:57

I think it's time to draw a line under this thread and thank you all for your responses and your time.
It would have been great if you all said 'yeah, excellent idea - go for it!' ...but based on actual responses I'll not waste further time on it and focus my efforts on the case.

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29th May 2019 13:50

I wager the directors have already set up another company and couldn't care less what you do .

In answer to your question No

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29th May 2019 14:04

Don't quit yet! There is a way to put pressure on builder. Apply to lift the veil of incorporation there have been a couple of recent cases where this has succeeded

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