Ltd company tax

[Paul_Rosser]

Thank you!

I'm assuming the bit on the gov.uk website which states that when an application for a company to be struck off is made that the directors need to file accounts to that point and pay any corporation tax and VAT, isn't a legal requirement then ?

 

[Spongebob]

Lots of things are stated as being legal requirements on government websites and publications which in fact are not legal requirements at all.

If I hadn't polished off that second bottle of red tonight I'd look for some examples. As it is it will have to wait until tomorrow!

 

[Paul_Rosser]

If I hadn't polished off that second bottle of red tonight I'd look for some examples. As it is it will have to wait until tomorrow!

Hope bottle 3 treats you well m8.

 

[teddys]

Let me just say at the outset that 'The Spongebob Plan' is very simple, highly effective, and 100% lawful.

So are you in effect suggesting your plan to the OP of this thread?

 

[Homshaw]

Regrettably, that's not going to happen with current budgetary constraints . . . but don't get me started on the shortcomings of the Insolvency Service and its disqualification and prosecution units . . . Only when the business community as a whole adopts a unified approach and begins to press central government hard for the regime to be properly enforced (all the provisions are there in the law - they are just not applied strictly enough) will we see a reduction in the number of people thumbing their noses at the system. And of course, there must be equilibrium between materiality/risk/reward/punishment/crime/proportionality/cost/commerciality and so on. It's not an easy equation balance.

The government keep announcing extra money to stop tax dodging. The amount of money involved in this case could easily cover the cost of policing it if the right regulations were in place.

Is it really so difficult to stop abuse in this sort of case. You could

1 switch the IR35 obligations onto the hospital or the employing company. They would be on the payroll tomorrow
2 Spread CIS type of arrangements to contractors

The Liquidation service are a waste of money. It should change in nature. Anyone looking to strike off a company with creditors should be subject to a short hearing - 5 minute statements from creditors allowed. They should present accounts, Directors Loan Account, dividends paid etc.Past involvement in limited companies taken into account. They could decide if the person has acted unreasonably and decide if he should be personally responsible for its debts.

This guy has earned 60k, paid no tax, lost it on dodgy investments but thinks he should keep his assets and start again from scratch

That he is able to get away with this is a bad message to send out. At the moment their is nothing to stop everyone doing it.

Don't think lack of resources is a valid reason for allowing abuse. What is available needs using better

 

[MrAnchovy]

... the assets of the company technically become the property of the Crown. However, the Crown has no idea that the assets even exist! In reality, the directors get to keep them.

What do you mean "technically" become the property of the Crown? The assets of a dissolved company are the property of the Crown, just as much as the car on my drive is my property. If you steal my car you might get away with it, but it is still theft.

If you misappropriate the assets of a dissolved company you might get away with it, but it is still theft.

How many people have you incited and/or conspired with to commit theft in this way?

 

[MrAnchovy]

All the law says is that all creditors must be notified that an application for striking off has been made. Nowhere does the law say that a creditor must be informed of the size of the debt owed.

And here is another flaw - the classic barrack room lawyer error of assuming that because one is aware of a partitular statute that applies in a certain set of circumstances it is the only law that applies in those circumstances.

S993 Companies Act 2006 seems almost to have been written to fit the scheme proposed:

If any business of a company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who is knowingly a party to the carrying on of the business in that manner commits an offence.

(2)This applies whether or not the company has been, or is in the course of being, wound up.

Note that these provisions are headed "Fraudulent trading" and replace previous statutes which were less widely worded but the term "trading" is no longer used within the text of the provision. This is clearly intended to ensure that actions of the company which are not trading (such as the preparations for voluntary winding up) are included.

 

[MrAnchovy]

At the moment their is nothing to stop everyone doing it.

Well the threat of 10 years inside is enough to stop me doing it, but I agree that the perceived liklihood of being caught may dilute this deterrent for some people.

Perhaps Spongebob would like to volunteer the details of some of the the people he has professionally advised - as he has reason to suspect that they have profited from the proceeds of crime he is obliged under the Money Laundering Regulations to report them.

 

[Spongebob]

And here is another flaw - the classic barrack room lawyer error of assuming that because one is aware of a partitular statute that applies in a certain set of circumstances it is the only law that applies in those circumstances.

S993 Companies Act 2006 seems almost to have been written to fit the scheme proposed:

If any business of a company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who is knowingly a party to the carrying on of the business in that manner commits an offence.

(2)This applies whether or not the company has been, or is in the course of being, wound up.



Note that these provisions are headed "Fraudulent trading" and replace previous statutes which were less widely worded but the term "trading" is no longer used within the text of the provision. This is clearly intended to ensure that actions of the company which are not trading (such as the preparations for voluntary winding up) are included.

At no point in my post above carefully outlining my strategy for resolving the issues of a small insolvent company have I suggested that any business of the company should be carried on with intent to defraud anyone. In what possible way can causing an insolvent company to cease all trading activities and then quite lawfully to apply for it to be struck off be construed as fraud?

Creditors of an insolvent company are at liberty to object to it being struck off and then to petition for it to be wound up. The Official Receiver is generally then appointed to act as liquidator of the company.

The fact is of course, that few creditors will ever follow through this rather expensive course of action because they know that the chances of recouping any money are slim. Generally they will cut their losses and make no objection to the striking off application. Increasingly, HMRC are also taking this attutude; historically they used to wind up companies as a matter of course.

The system may be flawed, but it is the system we've got.

My strategy may well be considered a route map through a flawed system, but it is most certainly not an incitement to commit fraud or any other offence.

 

[Spongebob]

What do you mean "technically" become the property of the Crown? The assets of a dissolved company are the property of the Crown, just as much as the car on my drive is my property. If you steal my car you might get away with it, but it is still theft.

If you misappropriate the assets of a dissolved company you might get away with it, but it is still theft.

How many people have you incited and/or conspired with to commit theft in this way?

This is the point at which you clearly part company with the real world. The assets of the type of company I'm talking about generally comprise an old laptop and printer, some tools of the trade, or some stock worth at most a few hundred quid at auction.

Do you honestly think that the Crown would have the slightest interest in aquiring these assets, even if they were aware of their existance and their claim on them?

Of course not.

What is the director of a recently dissolved company supposed to do? Phone up the Treasury Solicitor and ask him to arrange collection of a pile of junk?

On second thoughts, maybe I should include this in future versions of 'The Spongebob Plan';

Send a detailed list of the poxy assets of your dissolved company to the Treasury Solicitor and ask him what he wants you to do with them.

I think we know what the answer would be...

 

[Spongebob]

Perhaps Spongebob would like to volunteer the details of some of the the people he has professionally advised - as he has reason to suspect that they have profited from the proceeds of crime he is obliged under the Money Laundering Regulations to report them.

Oh boy, it gets better!

I will gladly volunteer all details of every single person I have advised professionally in matters of insolvency...


There aren't any!


I am not a professional advisor and have no constraints or obligations under any statutory regulations whatsoever.

I am simply a childrens' cartoon character who happens to know far more about surviving insolvency that most accountants or professional advisors.

 

[MrAnchovy]

At no point in my post above carefully outlining my strategy for resolving the issues of a small insolvent company have I suggested that any business of the company should be carried on with intent to defraud anyone. In what possible way can causing an insolvent company to cease all trading activities and then quite lawfully to apply for it to be struck off be construed as fraud?

Yes you do. The bit where you suggest that the company should dishonestly fail to disclose its Corporation Tax liability to HMRC which it is under a legal duty to disclose intending to cause a loss of tax revenue to HM Treasury.

Let's have another look at Section 3 of the Fraud Act 2006:

A person is in breach of this section if he—
(a)dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and
(b)intends, by failing to disclose the information—
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.

Which particular part of that provision do you think does not apply?

 

[MrAnchovy]

This is the point at which you clearly part company with the real world. The assets of the type of company I'm talking about generally comprise an old laptop and printer, some tools of the trade, or some stock worth at most a few hundred quid at auction.

Theft of an old laptop and printer, some tools of the trade, or some stock worth at most a few hundred quid at auction is still theft - yes or no?

And if it is theft then your plan is not "perfectly legal" is it?

Do you honestly think that the Crown would have the slightest interest in aquiring these assets, even if they were aware of their existance and their claim on them?

The Crown has already acquired the assets on the dissolution of the company, as surely as my daughter inherits my car when I die - yes or no?

What is the director of a recently dissolved company supposed to do? Phone up the Treasury Solicitor and ask him to arrange collection of a pile of junk?

Well you can phone but they provide an online form for exactly this purpose.

 

[MrAnchovy]

I am not a professional advisor

You are holding yourself out as one.

and have no constraints or obligations under any statutory regulations whatsoever.

What, you think Section 45 of the Serious Crime Act 2007 doesn't apply to you?

A person commits an offence if—
(a)he does an act capable of encouraging or assisting the commission of an offence; and
(b)he believes—
(i)that the offence will be committed; and
(ii)that his act will encourage or assist its commission.

 

[David Griffiths]

This is the point at which you clearly part company with the real world. The assets of the type of company I'm talking about generally comprise an old laptop and printer, some tools of the trade, or some stock worth at most a few hundred quid at auction.

Not to mention in all too many cases the substantially overdrawn directors loan account where the director has spent the corporation tax money on himself.

 

[Homshaw]

I will reiterate I have every sympathy for a businessman whose business goes wrong.

We had an AerialSolution on a little while back who invested in Solar Panels only to find the government cut the feed in tarriff. No problem

This present case is just wrong by any measure of what is reasonable

I don't think its wrong to have protection for limited companies. The abuse needs to stop

 

[Simba7]

Wow! What is going on here! Merely asked for advise and some people are taking it to heart. FYI- I have not sent for striking off, I will be filing my accounts before 31st December and face the music.

Some of you (MrAnchovy) really should relax and not take it to heart. This is a forum and a forum hich I thought is for people to give constructive advice not to attack others indirectly. You act as of you've done nothing illegal (have you not gone slightly above the speed limit, ever? I'm sure you have. Shall we report you for that??)

Try and relax and if there isn't anything constructive to say, I'd sit aside!

 

[MrAnchovy]

Sorry for hijacking your thread Simba7, but this is an argument that needs to be had.

I may routinely exceed the speed limit, but I do not advise that anyone else does. I am prepared to pay the penalty if I get caught, and because society deems speeding to be a minor offence I can live with the guilt.

 

[Simba7]

The point is its illegal to go over the speed limit- regardless if it's minor or major! So you should be punished for it regardless if you get caught. The point I'm trying to make is no one is a saint- look at the ones that create the law (MPs) they probably do the worst fraud etc. have they really been punished?? No!

 

[Homshaw]

The point is its illegal to go over the speed limit- regardless if it's minor or major! So you should be punished for it regardless if you get caught. The point I'm trying to make is no one is a saint- look at the ones that create the law (MPs) they probably do the worst fraud etc. have they really been punished?? No!

They do say if you can't beat them Join them

 

[internetspaceships]

Not to mention in all too many cases the substantially overdrawn directors loan account where the director has spent the corporation tax money on himself.

And this is EXACTLY my way of seeing this.

Spongebob- I can see the application of your "plan" so to speak in certain circumstances but when it starts being rolled out as a catch all panacea of all ills then it's being misused.

Paul, sorry mate but unusually for you, I think you got this piece of advice way off base.

 

[Paul_Rosser]

Paul, sorry mate but unusually for you, I think you got this piece of advice way off base.

Tell me about it, all I did was point the OP to the previous post as the advice seemed to fit and this was the result.

As it appears the filing of a final set of accounts when a company is struck off, is a legal requirement so striking off in an attempt to not have to pay your CT/PAYE etc won't work.

Life would be so much easier if everyone just paid their taxes and never spent the VAT/CT money!

 

[cheaper accountant]

Tell me about it, all I did was point the OP to the previous post as the advice seemed to fit and this was the result.

You seemed to have pulled the pin out the grenade on this one ... but to be honest I can see all you were trying to do was give some help to the OP.

 

[Simba7]

As it appears the filing of a final set of accounts when a company is struck off, is a legal requirement so striking off in an attempt to not have to pay your CT/PAYE etc won't work.


but according to spongebob that is not true and you don't have to file in final accounts. Correct?

 

[Paul_Rosser]

That seems to be the argument.

If it's legal to have a company struck off and not file final accounts then it's a massive loophole you can use to not pay your CT/VAT liabilites.

If however it is illegal to not file final accounts then even if in reality it's not enforced, then the advice given can only be to not break the law, file your accounts and pay whats due.

 

[Simba7]

What would be good if anyone who has done the spongebob plan and succeeded, or if anyone knows that someone has successfully completed the spongebob plan.

 

[MrAnchovy]

Paul, you are making the same mistake as our misguided friend Spongebob.

Whether it is or is not lawful to cause a company to be wound up without submitting a Corporation Tax return is irrelevant.

What is relevant is that:

1. a company is required to submit a tax return in respect of every Accounting Period;
2. an Accounting Period ends, and a new one commences, when the process of winding up is started;
3. if a company dishonestly fails to submit a tax return it is requred to submit and intends by that failure to pay less tax, then it commits fraud;
4. if a company commits fraud then (i) every person who is knowingly a party to the actions that comprise the fraud commits the offence of fraudulent trading; and (ii) this applies whether or not the company has been, or is in the course of being, wound up.

 

[MrAnchovy]

What would be good if anyone who has done the spongebob plan and succeeded, or if anyone knows that someone has successfully completed the spongebob plan.

Many people have successfully stolen cars, that doesn't mean it is a good idea to steal a car.

 

[Simba7]

Are you saying that you can gaurantee HMRC will object to the strike off automatically as they would see there are no accounts for that year? Or are you basically saying people should file there accounts because IF they get caught theyll have to file the accounts, but otherwise they could get away with it? Basically, is your advice about not doing things imorally?

 

[Paul_Rosser]

Paul, you are making the same mistake as our misguided friend Spongebob.

Whether it is or is not lawful to cause a company to be wound up without submitting a Corporation Tax return is irrelevant.

Isn't the legality the only thing which is relevant ?

If by not submitting a tax return when you apply to have a company struck off is fraud and it's an offence, then this course of action should not be advised.

1. a company is required to submit a tax return in respect of every Accounting Period;
2. an Accounting Period ends, and a new one commences, when the process of winding up is started;
3. if a company dishonestly fails to submit a tax return it is requred to submit and intends by that failure to pay less tax, then it commits fraud;
4. if a company commits fraud then (i) every person who is knowingly a party to the actions that comprise the fraud commits the offence of fraudulent trading; and (ii) this applies whether or not the company has been, or is in the course of being, wound up.

This would point towards it being an offence to not submit a return when applying for a company to be struck off.

Obviously if people decide to go ahead anyway, then thats their choice.

 

[MrAnchovy]

Are you saying that you can gaurantee HMRC will object to the strike off automatically as they would see there are no accounts for that year?

No, they almost certainly won't object unless either there is a significant debt outstanding, or there is a history of profitable trading so that they can infer that there will be tax due on the profit for the final period.

Or are you basically saying people should file there accounts because IF they get caught theyll have to file the accounts, but otherwise they could get away with it? Basically, is your advice about not doing things imorally?

No, I'm not offering any advice as to what people winding up companies should do.

I am saying that the statements that Spongebob has made that it is lawful for a person to cause a company to attempt to evade payment of tax by failing to disclose that that tax is due is wrong, as is his statement that it is lawful for a person to benefit from the assets of a company that has been dissolved and that are the property of the Crown.

And I am further saying that if you do follow either of those courses of action and are prosecuted and convicted, you will have a criminal record and face up to 10 years imprisonment.

Next to that hanging over your head for the next 21 years the moral argument becomes somewhat irrelevant for most people.

 

[MrAnchovy]

Lest I be accused of scaremongering I should state that under current practice it is likely that HMRC would follow Code of Practice 9 which is basically an agreement with the taxpayer that if they cooperate with HMRC and make full disclosure, and pay any tax and penalties due, HMRC will not seek a criminal prosecution. Because there is no prosecution no information on cases dealt with under COP 9 is generally published.

There is no guarantee that COP 9 will still be around in 20 years time.

 

[Homshaw]

Don't think this discussion is going anywhere.

The big difference is between what is right and reasonable and what is likely to happen.

The main culprit in all this is government department who consume vast amounts of tax payers money but haven't proper controls in place

 

[Spongebob]

I am saying that the statements that Spongebob has made that it is lawful for a person to cause a company to attempt to evade payment of tax by failing to disclose that that tax is due is wrong, as is his statement that it is lawful for a person to benefit from the assets of a company that has been dissolved and that are the property of the Crown.

You're tllting at windmills here and have totally missed the crux of the issue. I have stayed out of the discussion for a day or so to see if you cottoned on but clearly you haven't.

A clue...

...David Griffiths got close to it a couple of pages ago.

 

[MrAnchovy]

Here are what I see as the cruces of the issue:

Let me just say at the outset that 'The Spongebob Plan' is very simple, highly effective, and 100% lawful.

So not "you can get away with it because nobody notices" or "nobody is going to chase a few hundred/thousand pounds so it’s all OK" – you are stating that the The Spongebob Plan is 100% lawful. If it is not (i) you are wrong and (ii) you are inciting and aiding others to follow a course of action that is not lawful.

It was never intended to be a way of avoiding tax or shafting creditors.

So if it does in fact facilitate avoiding tax or defrauding creditors, then it fails.

3. A letter is sent out to all creditors of the company as follows;

Unfortunately the company has no assets…

In order for this statement to made, the company must in fact have no assets, i.e. no stock, no loan to directors, no debtors, no plant and equipment, nothing. It is difficult to see how a company can have arrived at this position while trading.

4. I generally recommend that all stock and other assets are removed from the company's premises and taken to a place of safe keeping. This is specifically to protect said assets from the risk of seizure by bailiffs acting on behalf of the landlord or another creditor. It is a responsibilty of the directors of the company that all creditors are treated equally; allowing one creditor to seize all the assets would constitute a breach of that responsibility.

Ah, so there are some assets. You obviously need to change the statement in the letter; perhaps "the company has insufficient assets from which to appoint an insolvency practicioner" – as we know, this is likely to cost upwards of £5,000 so if the aggregate value of the assets (before netting with any liabilities) is less than this, you may be able to make this statement honestly.

Note that I do not use the word "honestly" from any moral standpoint, I use it in the sense of the Fraud Act 2006 ("Fraud by false representation: a person is in breach of this section if he dishonestly makes a false representation, and…")

5. 3 months after ceasing trading an application is made to Companies House using form DS01 for the striking off of the company. Notification of the application is sent to all creditors and other interested parties so as to comply with all relevent legislation.

Form DS01 includes a statement by the Directors in relation to S1004 and S1005 of the Companies Act 2006 – you MUST go through each of these ensuring they don’t apply – for instance the three months runs from the date of the last disposal of any trading asset (S1003(c)), not from ceasing trading. Note also that there is a deadline for sending notices to interested parties; there is no reason not to do this at the same time.

And here is the big loophole...

All the law says is that all creditors must be notified that an application for striking off has been made. Nowhere does the law say that a creditor must be informed of the size of the debt owed.

In the specific case of HMRC the extent of any debt owed is generally self declared by the debtor by means of a tax return. Tax returns are due to be sent in by certain due dates. If a director applies to have his company struck off before that due date he has no obligation whatsoever to divulge to HMRC the extent of any debt.

What happens in these circumstances is that HMRC receive notification from the company that an application has been made for striking off but on checking their records they find that no monies are due. Therefore no objection to the striking off is made and it goes through automatically.

This is not a "loophole". Liability to tax, and to make a return to HMRC declaring any tax due, is nothing to do with whether a company is shown as 'active' on the Register of Companies. Consider the analogy of a self employed person: Self Assessment returns for individuals must normally be submitted by the 31 January following the year of assessment. But what if he dies on the 1 January? Is he no longer liable to pay tax for the previous year? Or to make a return and pay tax for the current year? Of course this is not the case – the returns must be submitted and the tax paid: anyone that is responsible for distributing his assets before that is done commits a crime. But the person that died did so perfectly lawfully!

This analogy is not perfect; there are laws that apply when a natural person dies that do not when a company is wound up and vice versa, and of course the action of winding up a company is reversible (in certain circumstances, such as unpaid taxes or at the demand of a creditor, the Registrar can restore a company to the register at any time within 20 years) whereas death is more permanent.

So do not be deceived by the mechanics of the winding-up procedure into thinking that it enables a company to escape the payment of taxes that are already due.

If this happens the assets of the company technically become the property of the Crown. However, the Crown has no idea that the assets even exist! In reality, the directors get to keep them.

What is the word "technically" intended to add here? If it is intended to mean that the Crown does not in fact own the assets, and so the appropriation of those assets by a director is not theft then the statement is wrong.

Clearly theft is not lawful, and so again the plan fails. One irony of this is that if the shareholders (acting as shareholders, not as directors) write to the bona vacentia office, the Crown will normally disclaim its interest in assets of little value, so that the shareholders can lawfully take them. With a little more diligence and a little less autodidactic arrogance this 'plan' could actually become useable, and useful.

Let me reiterate once and for all that it it is competley lawful in every way.

Clearly not. In summary:

1. A company cannot lawfully state to creditors that it has no assets when in fact it does (Fraud Act 2006 S2)
2. If a company has received a notice to submit a tax return it cannot lawfully fail to file that return. (Finance Act 1998 Sch 18 Para 3)
3. If a company has not received a notice to submit a tax return it cannot lawfully fail to notify HMRC that it is chargeable to tax. (Finance Act 1998 Sch 18 Para 2)
4. A company cannot lawfully fail to declare to HMRC that Corporation Tax is due intending to benefit by that omission (Fraud Act 2006 S3)
5. A person cannot lawfully be a party to actions of a company intended to defraud its creditors or any fraudulent purpose (Companies Act 2006 S993)
6. A person cannot lawfully, dishonestly appropriate property belonging to the Crown with the intention of permanently depriving the Crown of it (Theft Act 1968 S1)

Hundreds of people have benefitted from it and each of them owes me a pint. I hope to spend my dotage collecting my debts!

I hope you are planning a long and healthy retirement as you will have to wait a while before you can reasonably collect:

• HMRC may commence an action in pursuit of taxes which have been fraudulently evaded up to 21 years after the event.
• The Registrar of Companies may restore a company to the register for 20 years after it has been wound up.

 

[Spongebob]

1. If a company has received a notice to submit a tax return it cannot lawfully fail to file that return. (Finance Act 1998 Sch 18 Para 3)
2. If a company has not received a notice to submit a tax return it cannot lawfully fail to notify HMRC that it is chargeable to tax. (Finance Act 1998 Sch 18 Para 2)
3. A company cannot lawfully fail to declare to HMRC that Corporation Tax is due intending to benefit by that omission (Fraud Act 2006)

OK Mr Anchovy,


Let's say that as soon as the letters are sent out to creditors, the director(s) resign, leaving the company without officers. For reasons best known to themselves, Companies House allows this to happen, as I know from personal experience.


The company is then quite literally unable to file any returns or notify HMRC of any tax due, because there is no-one there responsible for doing it.


The company may be guilty of technical offences under The Finance Act, but the erstwhile director(s) are guilty of nothing.


You know as well as I do that in these circumstances the company will either be struck off as a matter of course for non-submission of returns, or wound up by HMRC and The Offical Receiver appointed liquidator.


Either way, any fines or penalties levied against the company will be written off if there are insufficient realisable assets for a dividend to be paid to creditors.


I'm still waiting for any constructive advice you may have for director/owners of small insolvent companies.


Until you furnish us with your pearls of wisdom I shall consider you a troll and feed you no further.

 

[MrAnchovy]

Let's say that as soon as the letters are sent out to creditors, the director(s) resign, leaving the company without officers. For reasons best known to themselves, Companies House allows this to happen, as I know from personal experience.


The company is then quite literally unable to file any returns or notify HMRC of any tax due, because there is no-one there responsible for doing it.


The company may be guilty of technical offences under The Finance Act, but the erstwhile director(s) are guilty of nothing.

As long as they really do walk away and have nothing more to do with the company (other than as shareholders if that is the case) this may be true. Companies House cannot prevent a sole director resigning as it is a matter of fact - they will act to strike off a company with no directors.

But that is not what your plan sets out, presumably because the directors need to hang around to continue to conceal the directors loan account from HMRC and/or take control of assets of the company vesting in the Crown following dissolution.

 

[MrAnchovy]

Until you furnish us with your pearls of wisdom I shall consider you a troll and feed you no further.

So you are not concerned that those who follow your plan are likely to be breaking the law while you continue to tell them everything is OK.

Perhaps that's not surprising - you seem to think advising people on how to break the law is what solicitors and accountants do.

I began by giving you the benefit of the doubt as misinformed, but I am begininng to realise that the problem is not that you don't know where the boundaries are between what can be done without committing a crime and what cannot, it is that you don't care.

 

[justintime]

Iv just read this very interesting thread and would like to point out some anomalies

1. There is no legal liability to file a tax return if one is not due. However there is a legal responsibility to ensure all accounts are up to date at the point of ceasing trading. The OP fails on both points.

2. The only quibble I have with the Spongebob plan is the non declaration of assets. If there are any assets then the first letter to creditors should say insufficient assets. The assets should then be declared to the OR using the online form indicated upthread. Its immaterial whether its a couple of hundred, if the OR isn't interested he will say so. Preferably I would cease trading, sell the assets, and pay the creditors proportionally. Then i would send the letter to creditors.

3. Companies do go under with insufficient assets, often through no fault of their own, but are then conned into appointing a liquidator, paying out of their own pocket. I find that way more immoral despite disagreeing with winding a company up to avoid paying tax due. Done properly and for the right reasons, the Spongebob plan is a good one, and i have wound 3 companies up (on behalf of other people) using a very similar method.

 

[justintime]

Hi not sure what to do.

My account emailed asking he needs my payslips/invoices/bank statements for year ending March 2012 as he accounts are due for filing by 31.12.12.

I do Locum work and I am not sure if I can pay my ltd company tax of when I file my accounts.

I have been paying myself a minimum salary but I think my balance on my bank statement end of March 2012 is around £16k! Is that balance profit? Does that mean I wil need to pay tax on that?

How do HMRC know how much you earn in a tax year or do they go by what you file? I think I've earnt around £60k but i have been spending the money also for social e.g. Eating out, shopping etc I have been paying the PAYE tax though.



Does anyone have any advice?

Many thanks

Hi Simba

As the accounts were for a previous period (to March 12) then they need to be filed, even if you had ceased trading before 31st December. Also you would have needed to ensure your accounts were up to date to December 2012 as well.

The 16k you had in your account bears no resemblance as to how much tax is due. Based on that figure of 60k and assuming expenses of 20k you are looking at a tax liability of 8k. That liability will still exist regardless of whether you wind the company up or not. I'm sure that some arrangement can be made with the tax man to pay that off.

My advice is let the accountant do the figures, then when you know the exact liability, contact the tax man and make an arrangement.