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bigduckontax
bigduckontax, Accountant
Category: UK Tax
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Experience:  FCCA FCMA CGMA ACIS
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Help Needed!. I have a limited company (IT Contractor) and

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Help Needed!.
I have a limited company (IT Contractor) and have £13k in the business account. I have been told by my accountant that I am £7k down and need to make up the shortfall. due to this I want to shut down the company. The accountant is in prcess of idenitying what I need to pay and how much. I want to shut the Limited company down ASAP and will deregister from VAT. Can I then move the money from the business account into my personal account and apply to companies to Wind up the company without paying the corporation tax?
Also, I do do this, can HMRC make a claim on my house in order to collect the money owed?

Many thanks

Edd.
Submitted: 11 months ago.
Category: UK Tax
Expert:  bigduckontax replied 11 months ago.
Hello Edd, I'm Keith and happy to help you with your question.

Firstly, it is a long established principle of English law that a company and its owners are entirely separate (Salmon v. Salmon). Thus any possibility of HMRC collecting from you to meet a company debt to them is all but impossible, although HMRC would prefer were it not! However, if you had improperly removed moneys from the company when debts were owed to HMRC that's an entirely different kettle of fish and might be regarded as a fraudulent preference. Shareholders rank last in a liquidation of a company. If however you have loaned money to the company you would probably be on equal footing with HMRC for moneys owed.

In my opinion it would be improper for you to wind up the company without settling all its debts in the proper order. There might be an alternative, especially if the company does not owe you anything personally, which is to let it go into administration as insolvent and thus wash your hands of the whole shooting match.

De-registration for VAT is no problem and can be done immediately.

Sorry to be such a wet blanket.
Customer: replied 11 months ago.


Hi Keith, the initial accountant didnt advise me correctly and as a result I have taken too much money from the company and as a result I wont have enough to pay my Corporation Tax. I am not sure how to get out of this mess. Would HMRC be able to take my house to make me pay them? I am worried in case they do this.


What options would be available to me for me to be able to walk away from this situation? I dont want to break the law but I cant afford to pay it all back either.


I wish never went down the Limited Company route.


 


Thanks


 


Edd.

Expert:  bigduckontax replied 11 months ago.
Right, to play the honest broker, return the excess moneys you have taken out of the company. Then, if there is still a shortfall, let the company go into administration.

There is not the slightest possibility of HMRC successfully chasing you personally for the company's debts once you have balanced the books as regards XXXXX XXXXX you extracted in error.

You could also enter into a CVA with your creditors which would wipe off all your debts. In a CVA your house is safe, but it is an extreme step and could well affect your credit rating.

Hope this helps
Customer: replied 11 months ago.

Hi Keith, sorry to keep asking questions (I am very worried). I thought that as I owe the company money as i took too much out, and as the company does nto have enough to pay HMRC, then they would be with in their rights to chase me personally for the money? If you were me, which steps would you make (forms I need to completed etc) to enable me to walk away? Do I move the money into my personal account, deregister and pay VAT, personal Tax then what ever is left pay the corporation tax whilst applying to wind up the company with companies house? I am not sure of the procedures or the best way forward.


Thanks yet again for your advice


Edd.

Expert:  bigduckontax replied 11 months ago.
Edd

Sorry Just Answer site crashed with my response. Don't move any company money into your personal account, it will attract the jaundiced eye of administrators and might well be fraudulent. Pay the excess funds you extracted in error back into the company and the look at the position. If there is a shortfall then put the company into administration as insolvent. If there is no shortfall then the company can be wound up in the normal manner.

If moneys withdrawn in error are still on the books when the company is compulsorily being wound up the liquidator will naturally chase you for their return.
Customer: replied 11 months ago.

So, just to clarify things, the best way forward would be to pay the VAT and deregister, pay my personal tax (Can this be done from the business account) and then what ever is left pay the corporation tax? If I do not have enough to pay the full CT what happens then? I imagine I would be chased or can I then just wind up the firm? I am so confused and having sleepless nights over this. I just want the company to be shut ASAP to allow me working and living a normal life again. This has caused so much stress.


Am I also right in saying that what ever happens, my house is safe?


 


I'm just not sure of the best way forward. the company has £13k in the account but owes another £7k. I wont be able to pay that back, how do I walk away morally or otherwise??


 


thankyou Keith.


 


Ed.


 

Expert:  bigduckontax replied 11 months ago.
You must not mix your personal liabilities with the company's. Pay your own debts, including what you incorrectly drew from the company, and then see what the company's position is, as I explained in my last post.
Customer: replied 11 months ago.

Keith,


OK, so I leave the money in the account, and pay what I can then see what state the company is in, if it still owes money then I can place the company into administration but I will be chased for the money still owed? So there is not a way forward to simply just walk away? I will still have to pay the money back. I just want to make sure my personal belongings and my house is safe too. This is very confusing for me.

Expert:  bigduckontax replied 11 months ago.
Right the nub of the problem is that currently you owe the company money, the amount you withdrew in error. Once that is refunded you have, as an Australian would say, no worries. If you simply walk away now then there is a danger that a liquidator will, quite correctly, go after you as any normal company debtor. Also you could in extreme cases find your possessions at risk and be disqualified as a company director. I have suggested the CVA route as a way out, but for you personally, it's a bit extreme.
bigduckontax, Accountant
Category: UK Tax
Satisfied Customers: 980
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other UK Tax Specialists are ready to help you
Customer: replied 11 months ago.


thanks very much for your advise Keith. I hope i get this sorted out ASAP.


 


Best Regards


Edd

Expert:  bigduckontax replied 11 months ago.
Glad to be of help. Please rate me.

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