Company Insolvent- need expert advice

GIS · May 4, 2019

Dear Members,
I am new to this forum. I need your kind and expert opinion about my company. I am director of IT service company formed in 2012. There is one more director. We have been trading since formed but last 3 years it faced loss and the company is in debt. We tried to get some business loans but with no success due to company's loss and director's bad credit score. We lost some of our clients as well. There is a debt of £9000 with HMRC and overdraft of £2000 with bank. Company has only 2 computers and 1 printers as assets. Considering the situation we decided not to carry on trading. We have been taking salary as a director from the company amount of £1000 roughly for living. HMRC is the main party who is continuously chasing us for payment.
In this circumstance could you kindly advice me what will be the best way to close this company as we are quite unable to repay the debt at this point. Also we don't want after closure debtor will be chasing us personally as we have plan to change our occupation.
Thank you

Scalloway · May 4, 2019

Have a read of the Spongebob plan.

https://www.ukbusinessforums.co.uk/...ich-to-pay-an-insolvency-practitioner.316523/

GIS · May 4, 2019

Hi, Thanks for your reply. Yes I did. But I am confused as the debtor is HMRC, any possibility of chasing personally. Because they were very tough each time I called them for a pay back plan.

Scalloway · May 4, 2019

HMRC will look to see if you have taken money out of the company that is not salary or legally declared dividend. They will expect you to pay tax on the money withdrawn.

Did you pay your salaries through RTI?

Mr D · May 4, 2019

GIS said:
Hi, Thanks for your reply. Yes I did. But I am confused as the debtor is HMRC, any possibility of chasing personally. Because they were very tough each time I called them for a pay back plan.

HMRC will chase the company for unpaid debts.

however if they wind the business up then any overdrawn directors loan account would be taken into account. the directors loan account would be money taken out of the business that is not accounted for by way of wages or correct dividend.
if the business is dissolved then any overdrawn directors loan account would need to be declared on your next tax return as untaxed income. any tax due on that would be a personal debt, not a company one.

GIS · May 5, 2019

Thanks for your informative reply. We did not withdraw any amount as dividend. All we taken as salary declared in RTI. Although we injected big amount to company which is loss now. Hmrc debt is for c tax and PAYE.

Lisa Thomas · May 7, 2019

You should really take advice from an Insolvency Practitioner to check that dissolution is the correct option for the Company, as opposed to Liquidating it:

https://www.gov.uk/government/publications/company-strike-off-dissolution-and-restoration

Bear in mind however that HMRC are likely to object to a dissolution - you might have to keep trying or wait for C House to do it.

Lisa Thomas · May 7, 2019

You may also want to consider putting your posting on the insolvency section of the forum for more replies.

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Company Insolvent- need expert advice

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