VAT after bankruptcy

[summa1979]

Hello,

Until August 2009 I had my own Ltd. company and I was working as an IT contractor. In June 2009 the work dried up which ultimately led to my filing for bankruptcy as I could no longer afford to pay mortgage/credit cards etc.

I paid what I thought would be my last VAT bill in July 2009, and didn't work after June 2009, and I filed for bankruptcy in August 2009. This was granted on the 10th of August. I have just received a bill from HMRC for £2094 VAT. I am not sure at the moment what this relates to as I haven't done any chargeable work since June 2009.

When I filed for bankruptcy, I had my interview with the Official Receiver. They said that my personal and company details were 2 separate entities and that I would have another interview in the future abouut the company. The company bank account has been frozen however and I can't now access the money that was in there (set aside to pay the remaining corporation tax bill that would be due this year).

To date, 5 months later and I haven't had another interview about the company with the OR. I have just had a letter explaining I might be eligable for early discharge from the bankruptcy.

During the BR process I contacted the busness debt helpine and they advised I had to resign from the company with companies house so the company could be wound up etc. which I did. I have now found information on the net that suggests I should have also de-registered my company for VAT??

So the question is - with no access to any of the money left in the company now, am I supposed to pay this VAT bill? I assume I should contact HMRC and tell them of my bankruptcy - but am I still liable? There isn't enough money in the company to pay VAT and Corp. tax, and even if there was I can no longer access it to make the payments.

I just wondered if anyone else has been through this - I dont want to say something incorrect to HMRC or the OR if I have to speak to them again.#

Thanks in advance for your help.

[Spongebob]

The amount that HMRC are now chasing will be for assessments they have raised in the absence of VAT returns being submitted for the last two quarters. Have you informed them that the company has ceased trading and submitted returns showing no tax due?

Ultimately, you would be able to get these assessments revoked; however I wouldn't bother. It is to your distinct advantage that HMRC thinks that there is money outstanding to them from the company.

While your personal bankruptcy and the liquidation of your company are essentially similar procedures conducted by the same staff at the Official Receivers office, they are totally seperate events. One does not lead automatically to the other. They are also triggered in different ways.

Your bankruptcy was initiated by you filling in some forms, keeping an appointment with a judge at your local county court, and then having an interview with a member of the OR staff. Unfortunately, it is not possible to put your company into liquidation in the same way without incurring fees running into thousands of pounds from an Insolvency Practitioner.

Instead, you must wait for for one of the company's creditors to serve a Winding Up Order on the company. As this costs the creditor money however, very few will ever do it. The exception is HMRC.;)

I would write to all creditors of the company as the former director informing them that the company has ceased trading, has no assets, and does not have the funds to appoint an Insolvency Practitioner. Invite them to initiate winding up proceedings in the High Court.

Eventually - and it may take many months - HMRC will serve the company with a Winding Up Order. Ignore it. You will then receive notification of a hearing at the High Court in London. Ignore this, too.

Finally, you will receive correspondence from your local OR office informing you that the company is now in liquidation and asking you to attend an interview. From then on it is just like your bankruptcy with similar questions being asked, this time though about the company. THIS is the time to reveal that in fact no monies are due to HMRC in respect of VAT after all!

Remember that your financial affairs are totally seperate from those of the company, and you are not personally liable for any debts. Following this procedure will cost you absolutely nothing other than your travel costs to the OR office. An IP would charge at least five grand...

Good luck.


Cheers
Bob

[Spongebob]

An afterthought;

In years to come you will rue the day that you left any money at all in the company bank account!:(