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Buachaill, Barrister
Category: UK Law
Satisfied Customers: 10528
Experience:  Barrister 17 years experience
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I was a director of a company that was wound up in 2013 by

Customer Question

I was a director of a company that was wound up in 2013 by hmrc. I was the sole director and the business was created with the use of a loan made by myself . The loan was guaranteed by myself with a security from my property in favour of the bank.
Upon he failure of the business I came to an arrangement with the bank to carry on repaying the loan at a reduced rate ,however , the bank subsequently decided that I was not paying back fast enough and called in the loan (via court without any notification though they said that they sent an email)
We were able to satisfy the bank through a loan from a relative and title was returned. I am now being pursued by hard for unpaid income tax from 2007/8 that should have been paid through my business.
My enquiry is whether the £43000, that the loan amounted to when the company was dissolved and has since been sorted, is a claimable liability that can be offset against my tax liability?
Submitted: 1 year ago.
Category: UK Law
Expert:  Buachaill replied 1 year ago.

1. I regret to say that the £43,000 loan is a claimable expense against the business income which would have been created and as such would give rise to a tax loss on your business. whether this would be able to be offset against the tax liability depends on whether the business was incorporated or not.

Expert:  Buachaill replied 1 year ago.

2. If the business was incorporated, then the loss on the business of the £43,000 loan would be offset against corporation tax. However, if the business was run with you as a sole trader, then the loss could be offset against Income Tax. However, before you would be able to offset this loss against Income Tax, you would have to enlist the services of an accountant to do up accounts for the business to prove that it actually showed a loss.

Expert:  Buachaill replied 1 year ago.

3. Be aware that HMRC don't like losses in current years Income to be set against prior years' tax liability. So you will have to pay penalties on the unpaid Income Tax due back in 2007/8. However, if you get a good tax consultant or accountant and show you don't have the means to discharge the monies, then some deal will be entered into. However, be aware that this would be in the hands of HMRC.

Expert:  Buachaill replied 1 year ago.

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