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Outstanding corporation tax on dissolved company?

HMRC ignored my DS01 Form and dissolved my company. Company owed approximately £8000 Corp Tax!

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Hello everyone,

5 months ago I asked an accountant to close my 3-year-old one-man company as I am no longer using it. They worked out how much corporate tax my company owed (approx £8000), completed a DS01 form and sent it to HMRC by post. HMRC responded saying that it was unsatisfactory because it should have been filled out online. My accountant said that because these are cessation accounts, and because the date the company ceased trading was before the end of the tax year, in this case the tax software does not allow you to file online. The accountant said not to worry and that the letter was automatically issued, and that HMRC would get in contact when they were ready - it may be a long wait due to the pandemic. I accepted this made sense and decided to wait, often logging into the system to see if the request for payment was showing up yet. Around 1 month ago I rang up HMRC and explained the situation and the lady was confused and unhelpful. She seemed to suggest I just wait. 

My accountant recently became very unwell and so I have been looking into all of this myself. I was surprised to see that a few days ago HMRC accepted the request to dissolve my company, and removed the ability to pay corporation tax through the government gateway, even though I had not paid the £8000 due yet. Anxious, I attempted to quickly re-register for corporatiom tax on the government gateway but it would not let me as the company is dissolved...

So, I now have no idea what to do. My company, now dissolved, owed £8000 in corportion tax, which was clearly stated to HMRC in the DS01 form they acknowledged they received by post and I now have no way of paying it. I am concerned as obviously it is a large amount of money and I do not want them to think I am attempting to dodge tax! Quite the opposite - I am urgently trying to find a way to pay it! 

I read a few articles saying that if a company is dissolved, all debts die with it and 'HMRC missed their chance', but this surely seems too good to be true... 

I would be extremely grateful for any advice!

Thanks!

Replies (40)

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blue sheep
By NH
26th Oct 2020 06:24

Are you sure that a copy of the DS01 was sent to HMRC as one of your creditors - the DS01 form is filed at Companies House not HMRC but you are legally required to send a copy to anyone that you owe money to?
If you did send to HMRC and they knew that there was an outstanding return to be filed they would (or should) have objected to the striking off on that basis not because the form should have been filed online.
Sounds to me as if a copy of the DS01 was not sent to HMRC in which case you have committed an offence - will you get away with it? yes most probably, lots do.
However if you are a law abiding citizen you need to to write to HMRC explaining the situation.

Thanks (2)
RLI
By lionofludesch
26th Oct 2020 06:27

I too am struggling with the facts as stated, which make no sense at all.

As NH says, form DS01 is a CoHo form, not an HMRC form.

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My photo
By Matrix
26th Oct 2020 06:53

There was nothing to prevent you paying the tax. I don’t know why you didn’t do so, what were you waiting for?

Now you have £8k and our struggling treasury doesn’t.

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Replying to Matrix:
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By Tax Dragon
26th Oct 2020 07:33

Agree, this is lame from the OP.

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By Sandnickel
26th Oct 2020 07:25

Reading between the lines, the accountant sent a paper copy of the accounts to HMRC which were rejected. At the same time a DS01 was sent to Companies House.

I'm also unsure why you didn't just pay the amount to HMRC like the other posters have said.

You could apply to get the company reinstated if you really want to pay the corporation tax.

I don't think HMRC would accept the payment now, but you could try to contact them and pay the liability? Not sure if that will work, however.

Otherwise you do nothing.

Thanks (0)
Replying to Sandnickel:
RLI
By lionofludesch
26th Oct 2020 08:47

Oh - maybe HMRC have objected to the striking off.

Just guessing, like.

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Replying to Sandnickel:
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By Paul Crowley
26th Oct 2020 09:14

What about the loan?
The £8,000 debt to the company, this is a company asset being improperly held by the OP.
Deliberately and knowingly.

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Replying to Sandnickel:
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By d123
26th Oct 2020 11:11

Sorry - yes. This is what happened. The paper copies were sent to HMRC. The DS01 was sent to Companies House. I misunderstood before.

This is my first business and I do not understand accounting very well, so I have just been following the advice of my accountant.

The reason I did not pay the corporation tax to HMRC is because I have been waiting for it to show up on the government gateway as usual, where it says 'you owe corporation tax' and then it gives you the exact amount. Through that link you then pay the tax.

Without this, I have not known where to pay it.

I have not intentionally tried to avoid paying the tax.

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Replying to d123:
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By Paul Crowley
26th Oct 2020 11:32

You accountant got it wrong if he sent a paper Corporation tax return.
Be glad he is unwell and get a properly qualified accountancy firm to resolve this properly.
An accountancy firm that has more than one person who can act and has been in business more than 10 years.
Qualified sole traders are required to have an alternate so that service is uninterupted.
Your man clearly does not

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By Paul Crowley
26th Oct 2020 08:40

Quote:

Hello everyone,

5 months ago I asked an accountant to close my 3-year-old one-man company as I am no longer using it. They worked out how much corporate tax my company owed (approx £8000), completed a DS01 form and sent it to HMRC by post. HMRC responded saying that it was unsatisfactory because it should have been filled out online. My accountant said that because these are cessation accounts, and because the date the company ceased trading was before the end of the tax year, in this case the tax software does not allow you to file online. The accountant said not to worry and that the letter was automatically issued, and that HMRC would get in contact when they were ready - it may be a long wait due to the pandemic. I accepted this made sense and decided to wait, often logging into the system to see if the request for payment was showing up yet. Around 1 month ago I rang up HMRC and explained the situation and the lady was confused and unhelpful. She seemed to suggest I just wait. 

My accountant recently became very unwell and so I have been looking into all of this myself. I was surprised to see that a few days ago HMRC accepted the request to dissolve my company, and removed the ability to pay corporation tax through the government gateway, even though I had not paid the £8000 due yet. Anxious, I attempted to quickly re-register for corporatiom tax on the government gateway but it would not let me as the company is dissolved...

So, I now have no idea what to do. My company, now dissolved, owed £8000 in corportion tax, which was clearly stated to HMRC in the DS01 form they acknowledged they received by post and I now have no way of paying it. I am concerned as obviously it is a large amount of money and I do not want them to think I am attempting to dodge tax! Quite the opposite - I am urgently trying to find a way to pay it! 

I read a few articles saying that if a company is dissolved, all debts die with it and 'HMRC missed their chance', but this surely seems too good to be true... 

I would be extremely grateful for any advice!

Thanks!

Thanks (0)
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By Paul Crowley
26th Oct 2020 08:59

Nothing makes any sense
But DS01 was improper as your were required to advise all creditors
Where was the £8000?
Company bank account or did you 'borrow' it from the company

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By Youareatit
26th Oct 2020 08:48

Reading between the lines the as no accountant, it as a DIY job.

Why did you not pay at the same time as submitting the figures.

Because you were trying your hand.

Then pop your Q on a forum for Accountants, despite ignoring all the points raised when joining, post th question as anon, despite the rules flashing at you when doing so, slag off your accountant to another bunch of accountants and expect a free answer from someone telling you not to worry you haven't broken any rules, laws or morals. Despite the opposite.

Where is the £8000? In you bulging back pocket no doubt.

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By bernard michael
26th Oct 2020 10:01

If the company is dissolved any assets inc cash belong to the Crown
However HMRC could apply to have the company restored

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JCACE
By jcace
26th Oct 2020 10:18

There are a number of unclear points here, but that doesn't mean that professionals who deal with such matters on a daily basis should necessarily draw the judgemental and harsh conclusions that one respondent in particular appears to have. On the face of it the OP is simply trying to settle a tax debt that, in the ordinary course of his business, would not yet be due.
We don't know for certain whether Companies House have struck the company off;
We don't know whether the company bank account was closed or whether funds have become bona vacantia;
We don't know what has been sent to HMRC or to Companies House.
OP, if your accountant is unable to deal with this, I would suggest engaging another to ensure that everything is properly dealt with. If you decide against this, you need to satisfy yourself that Companies House have indeed dissolved the company.
But you should remember that the DS01 form included the following:
"Notify all parties
You must send copies of this application to all notifiable parties e.g. creditors,
employees, shareholders, pension managers or trustees and other directors of
the company within 7 days from the day on which the application is made."
If you wish to clear your conscience and avoid the risk of HMRC restoring the company, you could, as others have suggested, speak to HMRC in order to resolve the situation, although what the outcome will be I don't know.
As follow-up reading, there's a very helpful article (albeit probably too late) at https://www.accountingweb.co.uk/practice/general-practice/striking-off-a...

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Replying to jcace:
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By Paul Crowley
26th Oct 2020 11:35

Critical issue is surely where the money is.
If still in bank account and no longer available to OP then no real issue.

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Replying to Paul Crowley:
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By d123
26th Oct 2020 11:39

Thanks for your responses. I am the OP.

I sent the remaining funds all to a personal bank account, so I could close my expensive business account while the company was no longer trading.

I was waiting for the exact amount of corporate tax owed to show up on the government gateway, as usual, at which point I intended to then pay the corporate tax due from my personal debit card. I did not want to risk overpaying or underpaying.

I am now in a situation where the company has been dissolved, the corporate tax section on the government gateway account has disappeared and I cannot re-register for it. Basically I want to pay the tax but have not been told by HMRC exactly how much it is, and how I should pay it.

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Replying to d123:
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By Sandnickel
26th Oct 2020 12:30

I think your only options are as outlined in earlier posts. You can restore the company, file the ct return correctly and pay HMRC.

Or, you can contact HMRC and explain the situation. I have a feeling that HMRC will not know how to deal with a payment that doesn't have a corresponding liability, but you may get lucky.

Its possible that HMRC could reinstate the company themselves to collect the tax, but until such a time that the company is restored (by you or a creditor) the liability doesn't exist.

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Replying to Sandnickel:
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By d123
26th Oct 2020 13:19

Hi Sandnickel,

Thanks for your response. The issue is that my accountant claimed that the CT return was correctly filed in the first place - apparently because they are cessation accounts, for a company that stopped trading before the end of the tax year, it can only be done in paper format.

So it seems there has been no wrong-doing.

Thanks (0)
Replying to d123:
RLI
By lionofludesch
26th Oct 2020 13:25

Quote:

Hi Sandnickel,

........ apparently because they are cessation accounts, for a company that stopped trading before the end of the tax year, it can only be done in paper format.

Afraid that's utter rubbish.

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Replying to lionofludesch:
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By d123
26th Oct 2020 13:43

I see.... that is very concerning. Thanks for your response.

I may contact some other firms to look into this for me, which is a shame as it will be another £1000 +

Better to be on the right side of the law though I suppose.....

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Replying to lionofludesch:
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By Paul Crowley
26th Oct 2020 17:23

+1 for utter rubbish

Also most of us consider DS01 desperate urgency by director is impossible to understand unless all liabilities of company paid

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Replying to d123:
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By Cheshire
26th Oct 2020 13:59

Quote:

Hi Sandnickel,

Thanks for your response. The issue is that my accountant claimed that the CT return was correctly filed in the first place - apparently because they are cessation accounts, for a company that stopped trading before the end of the tax year, it can only be done in paper format.

So it seems there has been no wrong-doing.

How odd.
Surely you have a copy of the CT return? Or at the very least the actual amount due?

Waiting for it to pop up in your online account is a feeble excuse for non payment. Yet you managed to clear the bank account!

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Replying to Cheshire:
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By d123
26th Oct 2020 14:05

I do indeed, as do HMRC (in paper format).

I have been waiting for it to pop up in the online account so that I can also quote the reference when I make the payment, as well as to also make sure that HMRC got the figure correct so I do not underpay or overpay any corp tax. This is how I've always paid the company corp tax, so I expected it to be the same.... I was not expecting the dissolution until this was complete!

I do not understand why I am being castigated as if I was purposefully trying to avoid the tax. I am a young business owner with very little experience - this is my first ever proper company - and if I were trying to avoid the tax then I would hardly come on an accounting board and ask for help!!!

Thanks (1)
Replying to d123:
RLI
By lionofludesch
26th Oct 2020 14:44

Quote:

I do not understand why I am being castigated as if I was purposefully trying to avoid the tax. I am a young business owner with very little experience - this is my first ever proper company - and if I were trying to avoid the tax then I would hardly come on an accounting board and ask for help!!!

Well, I for one don't want to appear too harsh because I think your accountant has fed you a never ending stream of excuses and blocks. The stuff about trading ending before the tax year end is a great example - cessation of trade ends a tax period so what your accountant told you is just not possible.

Then there's the tripe about the paper return. A company ceasing to trade still files online. They may - but are not required to - file a pdf of the accounts, attached to the online return. They are not required to file a paper return.

It shouldn't cost £1000 to file a Corporation Tax Return from existing accounts. £150 - £200 would be nearer the mark (outside London, obviously). Why wouldn't I offer my services ? Well .......

► I'd need to verify your identity for the Money Laundering Regs and go through all the stuff that goes with setting up a new client these days. It becomes a significant proportion of the fee for a small, one-off task.
► I don't trust your accountant's accounts. They may have to be re-prepared.
► I'm not convinced that your company has been struck off. If it has, all the bank accounts will have been frozen and the Queen now has your money. If it hasn't, that's more work that needs doing.
► I'm not sure you've told us everything. Partly because I'm not sure you've been told everything.

Your best plan might be to say to HMRC, "look, I've got this £8000 if you want it." It doesn't always work, but it might do.

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Replying to d123:
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By Cheshire
26th Oct 2020 15:33

Quote:

I do indeed, as do HMRC (in paper format).

'' if I were trying to avoid the tax then I would hardly come on an accounting board and ask for help!!!''

Oh you would be surprised what pops up on this forum.

For future reference, not everyone has an online account, there are instructions on google on how to pay.

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Replying to Sandnickel:
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By Paul Crowley
26th Oct 2020 17:09

The liability that does not exist is now increased by £2600 arising from overdrawn directors loan

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By Justin Bryant
26th Oct 2020 13:39

The SBP works quite well doesn't it if you do it accidentally as in this case?

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Replying to Justin Bryant:
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By d123
26th Oct 2020 13:44

What is the SBP?

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Replying to d123:
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By Justin Bryant
26th Oct 2020 13:48

“Spongebob Plan”

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Replying to Justin Bryant:
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By d123
26th Oct 2020 13:55

Ah - thank you. Unfortunately for me I am actually eager to pay this tax! It just seems my accountants have cocked everything up for me and HMRC have prematurely dissolved my company!

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Replying to d123:
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By Justin Bryant
26th Oct 2020 13:56

I don't doubt that.

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Replying to Justin Bryant:
RLI
By lionofludesch
26th Oct 2020 14:02

How long have HMRC been dissolving companies?

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Replying to lionofludesch:
Red Leader
By Red Leader
26th Oct 2020 16:57

Oh do keep up! It's old news now.

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Replying to lionofludesch:
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By Justin Bryant
27th Oct 2020 12:46

All the time. Just go visit the Insolvency Court any day and you'll see 90% of winding up petitions (which all inevitably lead to dissolution from CH Registry of course - all winding up action does) are from HMRC over unpaid tax debts.

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Replying to d123:
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By Paul Crowley
26th Oct 2020 17:13

No HMRC did not dissolve the company, you did
No tax return filed with HMRC
Sending paper is not filing. This is common knowledge for accountants. But not your's?

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Lisa Thomas
By Insolvency Practitioner
27th Oct 2020 11:00

I haven't read all the replies so apologies if I am repeating something.

If there are no other creditors then you should either just send the £8k to HMRC or return the money back to the Company Bank account. It will then belong to Bona Vacantia/the Treasury Solicitor.

HMRC might reinstate the Company to pursue the tax.

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Replying to Insolvency Practitioner:
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By d123
27th Oct 2020 12:17

Hi,

Thank you so much for your kind response. Could you suggest how/where I should send the tax money (with reference needed etc)?

The company bank account is closed.

I have written HMRC a letter which I am about to send, explaining the situation, and hoped that they would respond telling me where to pay the tax money.

If you have any advice please let me know.

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By bernard michael
27th Oct 2020 12:23

Here's how to pay Corporation Tax :-

Bank details for online or telephone banking, CHAPS, Bacs
You can pay HM Revenue and Customs (HMRC) by Faster Payments, CHAPS or Bacs.

The back of your payslip, sent to you by HMRC, tells you which account to use. If you’re not sure, use Cumbernauld.

Sort code Account number
HMRC Cumbernauld 083210 12001039
HMRC Shipley 083210 12001020
Reference number
Use your 17-character Corporation Tax payslip reference for the accounting period you’re paying.

You’ll find the payslip reference:

on any payslip that HMRC sent you
through your company’s HMRC online account - choose ‘View account’ then ‘Accounting period’

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