christhelawyer : HiWelcome to JustAnswer. My first response will follow shortly. Please feel free to follow up if anything is not clear
christhelawyer : If the tax bill is owed by the company then the debt will reduce the value of the company. Is it owed by the company or your father personally?
It is owed by the Company. Unfortunately there is significant in the Company besides the shareholders advance which is all the my father and the actually funds have been used to purchase the family home etc.
Sorry meant to say significant assets in the Company and my father is the sole director and shareholder of the Company
christhelawyer : Will the company be able to pay the tax?
No as there is no assets. I fear Dad will be made responsible as he is the sole director.
Does matrimonial law state that all matrimonial assets and liabilities need to be split equally?
christhelawyer : If the tax debt is owed just by the company, which cannot pay the tax, then the company may need to be liquidated. But the directors are not liable for company tax, so your father will not be liable.
christhelawyer : This means that the debt will not be owed by him in most such cases.
Yes but that would mean that the director has traded the company into liquidation and possibly when the company is insolvent We do want to pay the tax.
christhelawyer : I understand that but the company debt is separate from personal debt, and where you cannot pay the tax, you are better off liquidating the company.
christhelawyer : this means the assets like the home and chattels will need to be divided equally.
But if we didn't want to does the matrimonial act state that both parties need to contribute equally to it?
christhelawyer : The company is a separate legal entity form the individuals. What she has a claim to are the company shares, and if the tax debt means the shares are valueless, then she has no real claim to that asset. However the other personal assets are still divided equally. You cannot use the company debt to offset the personal assets.
Eventhough the personal assets were gained by the profits from the Company that owes the debt?
christhelawyer : I am afraid so.
Can the Company claw back the shareholders drawings taken to purchase the matrimonial assets?
christhelawyer : That would depend on how the drawings were taken in the company books. If they were taken as shareholders advances thenossibly yes.
christhelawyer : *then possibly yes
Thanks. Then how can the other party claim only the assets of the Company?
christhelawyer : It will depend on how the advances were made and you would need to discuss this with your accountant. But you may have a point, that if she is liable for money owed to the company then this will affect what she gets. But if the shareholders advances are repaid then this will not affect her claim to the half share in the personal assets and just mean more of the tax is paid.