I got a new client this week who is a VAT registered van courier (sole trader). When he was giving me his shoe box with all the receipts for the last year, he has also given me a different folder informing of an additional Limited Company he created in June 2020.
The client thought of starting a business through a Limited Company importing products from China and selling them on Facebook. He didn't consult an accountant and opened a Limited Company, registered it for VAT, for PAYE, CT...and never did anything else! He never traded at all. He didn't even open a business bank account. He didnt even activate PAYE Code on Government Gateway.
For the last year, he has been receiving letters of assessments for VAT stating he had not submitted the returns. He did not read the wording of the letters, but he paid the amounts that HMRC was assessing on the letter, still without submitting a VAT return. He has paid a total of £269 on VAT assessments.
He has received this month a letter of DM PAYE showing a Statement of Liabilities for PAYE Specified charges of the last 6 months which states the company owes a total of £539.40.
I have only been an accountant for less than a year and I don't take jobs I don't feel competent for. However I think this is a simple one with a bit of guidance. Correct me if you think otherwise, please.
a) If I inform HMRC that the company has never traded, could the VAT payments be recovered? Yesterday I submitted the last 5 VAT returns at £0 and deregistered the company for VAT as of 27th of July 2021.
b) If I inform HMRC there have not been employees, would they strip out the £539.40 PAYE debt?
c) Assuming they don't strip out the debt, is it possible to strike off the company if the only debtor is HMRC? I am aware striking-off is only permitted for solvent companies but I never striked off a company which is insolvent just with a small debt with HMRC.
d) The courier asked me if closing could affect his personal credit rating. I believe that given there are no third party lenders involved, the debt with HMRC would not affect him personally. But I have my doubts, as he acted negligently as a director.
Any advice out of my questions would be helpful too.