Final returns - sponge bob

[Its4john]

Does a company need to submit final tax and vat returns when using the spongebob plan?

asking for a friend

 

[JEREMY HAWKE]

That depends as the plan is for those that have no hope what so ever and if a considerable amount is owed to the revenue It would be advisable to get the IPs in and there are good IPs on this site !

 

[Its4john]

That depends as the plan is for those that have no hope what so ever and if a considerable amount is owed to the revenue It would be advisable to get the IPs in and there are good IPs on this site !

?? The question doesn't depend on anything. The spongebob plan is going ahead.

The question is :

Does a company need to submit final tax and vat returns when using the spongebob plan?

 

[Mr D]

?? The question doesn't depend on anything. The spongebob plan is going ahead.

The question is :

Does a company need to submit final tax and vat returns when using the spongebob plan?

Short answer appears to be no.

 

[JEREMY HAWKE]

Agree with Mr D No !

But where did that money go has our director here taken too much out ?

Could HMRC make the director personally liable if this money has been taken in dividends
While I think the plan is good for those with genuine problems I think some people just assume that the word spongebob is some magic formula

To comment we really need to understand some of the circumstances

 

[Its4john]

Agree with Mr D No !

But where did that money go has our director here taken too much out

To comment we really need to understand some of the circumstances

What money? Director has taken nothing in dividends or salaries. DLA is not overdrawn, this is a simple case of a business which has failed. Why do circumstances need to be understood for a simple question?

Thank you @Mr D for your answer.

Would anyone else like to answer this simple question without needing irrelevant analysis?

 

[JEREMY HAWKE]

I understand Bob's plan
I did not ask this question to look clever
We need to understand the situation with the company accounts to answer yes or no
If it was a simple yes or no you would not have a business forum

If the company is not owed money from the director then no

 

[Scalloway]

Does a company need to submit final tax and vat returns when using the spongebob plan?

HMRC will object if the returns are overdue. If they are submitted and show HMRC are due money then they will object.

But submitting them is not essential as Companies House will allow strike off to go ahead eventually unless HMRC appoint a liquidator.

 

[Adam93]

If you don’t file them, it will drag the whole process out. If you do file them, it will be a quicker process.

if a genuine failed business, there is probably no tax to pay anyway so why wouldn't you file?

if you want meaningful advice, more information needs to be provided. At the moment you are only getting generic advice which may or may not be applicable to you.

 

[Chris Ashdown]

If you provide final accounts and have nothing to hide then presumably it shows HMRC good intent and gives them the information to either let companies house go ahead or not

Using the same logic not forwarding them in whatever state may make them keep objecting and drag things out for quite a long time

If you have a large DLA then it may not be a good idea to tell the world especially HMRC

Worth talking to a few IP's to see the cost and what they would agree to, less stress and more likely a clean cut

 

[Mr D]

If you don’t file them, it will drag the whole process out. If you do file them, it will be a quicker process.

if a genuine failed business, there is probably no tax to pay anyway so why wouldn't you file?

if you want meaningful advice, more information needs to be provided. At the moment you are only getting generic advice which may or may not be applicable to you.

Its spongebob - the end result is company dissolved. We don't need more information - either a creditor winds the company up or companies house allows it to be dissolved. Are there any other options?

 

[Lisa Thomas]

HMRC will object unless final returns are filed. Sometimes they will also Liquidate.

But if statutory docs. are not filed with Companies house they will strike it off in due course anyway.

 

[Spongebob]

Simple answer - No!

There are two possible outcomes of the Spongebob Plan.

1. Companies House dissolves the company without a liquidator getting involved.

2. A creditor (normally HMRC) winds the company up leading to a compulsory liquidation.

The non-submission of tax or VAT returns has no impact on the outcome.

 

[JEREMY HAWKE]

Simple answer - No!

There are two possible outcomes of the Spongebob Plan.

1. Companies House dissolves the company without a liquidator getting involved.

2. A creditor (normally HMRC) winds the company up leading to a compulsory liquidation.

The non-submission of tax or VAT returns has no impact on the outcome.

You or nobody else to my knowledge has ever explained what happens if HMRC suspect that the director may have taken money out .

I dont believe even after all this time studying the plan that CH will just close it down when they get fed up and HMRC wont challenge with out the knowledge of the companies financial status .

If a director has done nothing wrong and genuinely does not owe the company money then they should use the plan but it is widely assumed on here that they will not be challenged

All who wish to partake in the use of this plan should be aware that HMRC will investigate and that the plan should only be used if your company is a genuine case

Those of us that are regular members of UKBF also have an unwritten loyalty to other forum members IE The IPs !

Why would we assist a new member to close their company using the plan and indirectly starve our fellow members (Insolvency practitioners) of business .

 

[Mr D]

Those of us that are regular members of UKBF also have an unwritten loyalty to other forum members IE The IPs !

Why would we assist a new member to close their company using the plan and indirectly starve our fellow members (Insolvency practitioners) of business .

Because we aren't going to suggest what is a non viable solution?

Great if an IP can be afforded. What if an IP cannot be afforded? Will sending the business to one of our resident IPs (who I have great respect for) benefit them? More importantly, what solution is the best for someone who has no assets, no money and has just lost their job?

 

[Red Wood]

@Mr D is insolvency to be declared when you can't pay some of your creditors or do you wait until you can't pay ANY of your creditors. Genuinely curious.

I do struggle to understand how IPs seem to make money from broke businesses. The recent receivership of that large retail giant as an example. How is it possible KPMG are appointed and indeed probably set to make vast sums of money if debt is all that is left, how are they paid?

hope that doesn't sound like a daft question?

 

[Mr D]

@Mr D is insolvency to be declared when you can't pay some of your creditors or do you wait until you can't pay ANY of your creditors. Genuinely curious.

I do struggle to understand how IPs seem to make money from broke businesses. The recent receivership of that large retail giant as an example. How is it possible KPMG are appointed and indeed probably set to make vast sums of money if debt is all that is left, how are they paid?

hope that doesn't sound like a daft question?

Often a business has assets. Large retail giant for example may have millions in stock that was for sale.
In the priority of payment for debts the IP takes their cut first. If there is anything left - and there often is in my experience as a creditor - then others get some money.
Wonga ended up paying out 4 point odd percent for example to its unsecured creditors.

Realistically if you cannot pay creditors when payment comes due then cannot pay any in full. Insolvent, get advice, any payments for creditors should then be pro rata. Much to the annoyance of every creditor who would prefer to be paid in full!

I got told I could pay the IP privately out of my own funds. Tad problematic when just lost your job...though I gather some high paid directors can use redundancy money to do that. If they use an IP.

 

[Red Wood]

thanks for the detailed response.

Fully understand then assets part. Does an IPs cut even come before those with charges against assets?

It seems like an almost unbelievable process in which a new party becomes involved with a failing business to jump Infront of the queue for monies owed and have a legal right to get at it first.

Im guessing majority of cases there isn't too much to spread about after the ips fees and other secured creditors. We've never had a big customer go pop but we have had a few medium sized debtors go and Its incredible when we get the full list of creditors and what was owed to everyone. How can directors make decisions that put companies in a position where they so reliant on one major customer paying they end up screwing over the whole list of creditors.

 

[Red Wood]

Re: your last statement. Why would any director agree to pay IP fees out of their own pocket, surely that can't be enforced due to the umbrella protection of limited liability. There is no guarantor provided to the IP as there maybe to a biz overdraft for example?

 

[Mr D]

Re: your last statement. Why would any director agree to pay IP fees out of their own pocket, surely that can't be enforced due to the umbrella protection of limited liability. There is no guarantor provided to the IP as there maybe to a biz overdraft for example?

Some presumably do pay. Hence it's an option.

 

[Mr D]

thanks for the detailed response.

Fully understand then assets part. Does an IPs cut even come before those with charges against assets?

It seems like an almost unbelievable process in which a new party becomes involved with a failing business to jump Infront of the queue for monies owed and have a legal right to get at it first.

Im guessing majority of cases there isn't too much to spread about after the ips fees and other secured creditors. We've never had a big customer go pop but we have had a few medium sized debtors go and Its incredible when we get the full list of creditors and what was owed to everyone. How can directors make decisions that put companies in a position where they so reliant on one major customer paying they end up screwing over the whole list of creditors.

Yes it would be embarrassing to go under owing 200 quid....
By the time a business is in trouble and tried to get out of trouble then may well have considerable debts.
I had a ccj from one company for about 16k then 2 months later one of my suppliers increased my credit limit to 10k from 3k so I ordered about 18k of stuff from them over the course of 3 weeks .... Still owed them 15k when we went under just over 12 months later.
Nice company - my new company has them as a major supplier now. My wife jokes I order with them pretty much every week.

Went under owing about 70k all in, including to me.
Biggest creditors declined to wind company up, biggest noise was by the smaller creditors. One of whom I owed just over 3 pounds to. Boy did they chase that....

The merry go round works just fine. Until it does not and the debts need paying.
Literally one week all debts were being paid, the following week they were not.

 

[JEREMY HAWKE]

Re: your last statement. Why would any director agree to pay IP fees out of their own pocket, surely that can't be enforced due to the umbrella protection of limited liability. There is no guarantor provided to the IP as there maybe to a biz overdraft for example?

You would pay an IP to get the job done without any future worries
Do you really want to do a cowboy shutdown and then worry for the next five years that they might come after you personally because you have not done things right

 

[Mr D]

You would pay an IP to get the job done without any future worries
Do you really want to do a cowboy shutdown and then worry for the next five years that they might come after you personally because you have not done things right

True, would have been far less stressful.
Creditors chasing? Refer them to IP.

Bit hard to do things wrong by that point though.

 

[Spongebob]

Why would any director agree to pay IP fees out of their own pocket?

If a director finds or suspects that their company is insolvent, they are invariably advised to consult an Insolvency Practitioner.

The Insolvency Practitioner will invariably advise liquidation, at a cost of around £5,000+VAT for a basic case. If there are significant assets - such as debtors - the IP will recover their fees from these. If there are insufficient assets to cover the IP's bill the director will often be advised that they will have to indemnify the IP personally or in all likelihood pay the fees upfront.

That is why directors agree to pay IP fees out of their own pocket. Because the IP tells them that there is no alternative.

Of course, such IPs are self-serving liars and there are alternatives.

 

[JEREMY HAWKE]

If a director finds or suspects that their company is insolvent, they are invariably advised to consult an Insolvency Practitioner.

The Insolvency Practitioner will invariably advise liquidation, at a cost of around £5,000+VAT for a basic case. If there are significant assets - such as debtors - the IP will recover their fees from these. If there are insufficient assets to cover the IP's bill the director will often be advised that they will have to indemnify the IP personally or in all likelihood pay the fees upfront.

That is why directors agree to pay IP fees out of their own pocket. Because the IP tells them that there is no alternative.

Of course, such IPs are self-serving liars and there are alternatives.

NO NO NO !

I am one of the ones that support the plan and the work you have done but !

The plan is for those that can shut the company with no worries at all if the company has no funds .
It should have nothing to do with avoiding IP fees unless the company is a one man band with no assets or debt
If you F this up ! and end up going personally bankrupt and spending the rest of your life worse off Then 5K out of your own money is nothing

IPs are not that bad they say the same about couriers

 

[Mr D]

NO NO NO !

I am one of the ones that support the plan and the work you have done but !

The plan is for those that can shut the company with no worries at all if the company has no funds .
It should have nothing to do with avoiding IP fees unless the company is a one man band with no assets or debt
If you F this up ! and end up going personally bankrupt and spending the rest of your life worse off Then 5K out of your own money is nothing

IPs are not that bad they say the same about couriers

Ummm... There are worries. There are phone calls, letters and even visits by debt collectors.
Hand everything over to an IP and it's their problem. Keep the problem yourself and it's months of stress.

 

[JEREMY HAWKE]

Ummm... There are worries. There are phone calls, letters and even visits by debt collectors.
Hand everything over to an IP and it's their problem. Keep the problem yourself and it's months of stress.

Thats what Im trying to get at @Mr D . It is better to have an IP but if things are bad then Bobs plan is fantastic
The plan is also good for those that are durable and even enjoy a bit agro on the door step
The fun would probably start for this type of person when the heat is applied

 

[Mr D]

Thats what Im trying to get at @Mr D . It is better to have an IP but if things are bad then Bobs plan is fantastic
The plan is also good for those that are durable and even enjoy a bit agro on the door step
The fun would probably start for this type of person when the heat is applied

We got into the habit of locking the door all the time after HMRC turned up on someone's doorstep about my wife's tax fines debt.
Wasn't our doorstep. No idea whose it was...

Handy though when debt collectors came knocking. If it was them rather than some poor soul after help...

Could have been really evil and set the wife on them. She's not as laid back about people being in the wrong as I am...
Some of the debt collectors on the phone were bad enough!

 

[JEREMY HAWKE]

We got into the habit of locking the door all the time after HMRC turned up on someone's doorstep about my wife's tax fines debt.
Wasn't our doorstep. No idea whose it was...

Handy though when debt collectors came knocking. If it was them rather than some poor soul after help...

Could have been really evil and set the wife on them. She's not as laid back about people being in the wrong as I am...
Some of the debt collectors on the phone were bad enough!

Look then in the eye and say what are you going to do about it ?

If they are looking for trouble and it kicks off then thats alright

Nothing wrong with a bit of smoke from time to time