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Finland Tax Debt - Company no longer active

Company Dissolved - Best Course of Action?

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Quirky one this...

Old client of mine who retails kids costumes. Ltd company dissolved no creditors, dissolved in 2018.  Since that point Finland have threatened a sizeable VAT bill based on cross border point of supply rules etc.

The disputed VAT was paid to HMRC and client never registered in Finland. Company no longer in existence. 

Any possibility for recourse on the director? Personal Liability etc? I imagine not given the extreme complexity in cross border vat, even the experts don't understand it & it's forever changing.

Ignore the notices? 

 

** We weren't advising them re.vat at the time - they've mentioned it now **

 

 

 

Replies (12)

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Scalloway Castle
By scalloway
26th Aug 2019 16:01

If the company has been dissolved its debts have died with it.

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By Matrix
26th Aug 2019 17:09

I would tell your client that you are not insured to provide Finnish legal or tax advice and suggest that they confirm the position with a Finnish adviser which you could arrange for a fee.

The first poster may be correct but if you reply as they advise then include disclaimers.

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By Accountant A
26th Aug 2019 17:21

Do you still have any business with the company (presumably not) or the former owner/director?

If not, refer them to a solicitor.

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By jackiemmunroe
27th Aug 2019 08:04

Thanks for replies. Re.the responses so far:

FAO: Accountant A
I don't work with the client anymore, they got in touch out of the blue. Sort of a friend too, friends of friends so to speak.

FAO:Matrix
I think that's wise, get some specialist advice on it & also highlight that it's beyond my professional remit.

FAO: Scalloway
That was my understanding too.

Could the authorities not take action against the directors?

Just want to inform myself as much so that they don't wind up having a Finnish court judgement or something hanging over their head which as a best case scenario would incur them significant legal fees.

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Replying to jackiemmunroe:
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By Matrix
26th Aug 2019 21:39

I would also check your PII, were you providing VAT advice?

I don’t know if they could go after the Director, so I would not answer this question until you know the answer if you have decided to get involved (but see my first point above).

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By Tim Vane
27th Aug 2019 02:11

Cross border VAT is not all that complicated in 99% of cases. Why was UK VAT being paid on children’s clothing? Were you advising them at the time?

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Replying to Tim Vane:
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By jackiemmunroe
27th Aug 2019 07:49

Apologies - they also sell adult costumes & adult fancy dress (sale not hire).

Yes we acted for them at the time but not on their vat.

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By paul.benny
27th Aug 2019 08:59

Cross-border VAT on goods is not necessarily that complex.

Did your former client hold stock in Finland? If not, how much were the sales there? The distance selling threshold is €35,000 per (calendar) year. Sales below that do not require registration/reporting.

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By LostinSuspense
27th Aug 2019 14:04

My experience is thus, FIL undertook work for a company in Cyprus which he did through a limited company registered in that country (I had nothing to do with that company whatsoever).

That company was wound up. I then moved his old dormant UK based company (with the same name) to my residential address for the sole purpose of winding it up (FIL lives in Cyprus).

I receive a letter through the post at my home address chasing a debt owed by the Cypriot company (from a government body) addressed to the UK company after I have started its winding up chasing a debt.

I advise FIL, who tells me to ignore the debt. UK company is wound-up and I have heard nothing on the debt.

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By Roland195
27th Aug 2019 14:42

If the company has been dissolved, then it would take an application to court to get it restored to the register to enable action to be pursued. I have no notion at all what the Finn's might attempt to do but seeing as HMRC rarely ever seems to bother, I would not be not be losing sleep over it.

In terms of action against the directors, that's a bit more nuanced. If it could be proven they were aware of the debt before the company was wound up then it could be an issue but it doesn't sound like that was the case? Again, I can't see who would be motivated to take it this far.

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Replying to Roland195:
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By jackiemmunroe
27th Aug 2019 16:35

I agree, probably overthinking it.

I think their worry is that somehow without knowing it they'll be a Finnish court judgement & ruling in a foreign territory etc, rather thinks the worst.

Don't even think that's possible, think if they did go for the director & not the company it would have to be the UK where they're resident (I think I've sufficiently overthought it now!!)

Thanks everybody for great help

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Replying to jackiemmunroe:
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By LostinSuspense
29th Aug 2019 10:48

But can they go after the Director and is there any point?

It is an interesting point, which law would then be applicable? Where would the prosecute? If the Finish authorities won, realistically what could they achieve? Are the Finish rules for VAT the same as the UK and do their authority have the same teeth to go after someone?

On reflection, this may just be an exercise that happens on paper with no tangible sanctions possible?

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