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Corporation tax due

Limited company unabe to make payment

Hi everyone

My question is relatively short I suppose!

If a limited company is unable to meet its Corporation Tax liability, what is the ordinary procedure that is taken by HMRC?

The company is a small company with 1 director/2 shareholders

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12th Feb 2019 18:49

Is this a temporary problem or is the company on its last legs ?

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By marks
12th Feb 2019 23:45

Question has to be what has happened the profit?

If the company has corporation tax of say £10k then in normal circumstances it will have made circa £50k profits.

What has happened to these profits?

Has there been a bad debt post year end that hasnt paid?

Has the company invested heavily into stock post year end that it cant sell?

Or, is as usually the case, has the director/shareholders sticked their noses in the trough and cleared the money out?

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By MDK45
13th Feb 2019 08:42

As above, what's the Director Loan account balance?

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13th Feb 2019 09:20

We need more information on the amount of Corporation tax and why the Company can't pay its Corporation Tax. Depending on the reason will dictate what HMRC are likely to do.

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13th Feb 2019 09:23

And, subject to the responses, has the due date for payment arrived yet. If not, contact the Business Payment Support line.

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13th Feb 2019 10:06

Why is it 'unable'?

Bear in mind that a CT liability arises because the company has made a profit. Either something catastrophic has happened to trading performance subsequently or you have been greedy.

Understandably, HMRC will react (even) less favourably if it's the latter.

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to andy.partridge
13th Feb 2019 10:12

andy.partridge wrote:

Understandably, HMRC will react (even) less favourably if it's the latter.

Have you spent HMRC's money as well as your own cut of the profits ? If so, it won't go down well a HMRC Towers.

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to lionofludesch
13th Feb 2019 10:15

Hey, that's what I said.

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to andy.partridge
13th Feb 2019 10:26

And I agree with you.

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to lionofludesch
13th Feb 2019 10:46

And I with you.

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13th Feb 2019 10:18

HMRC may agree a TTP depending on the circumstances or may instead send in bailiffs to recover goods to the value of the debt and costs, or may petition to Liquidate the Company.

As the Company is insolvent the Directors have a duty to take professional advice (preferably from a licensed Insolvency Practitioner) and mitigate the position.

Dissolution or Liquidation may be the only option but the Directors need to take advice to explore all options.

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