Can HMRC Collect PAYE From my dissolved company

[DaveM36]

Hi,

Appreciate any feedback from anybody on this topic.
I dissolved my limited company earlier this year via the DS01 Method. Companies House informed and sent me a letter confirming the registrar confirmed the company was dissolved giving a date.
Yesterday I received from HMRC a demand to that dissolved company for £1400 PAYE, I have returned the letter to HMRC stating company is dissolved giving the date is was, I am liable for this money or as the company is now dissolved does this debt die with the company.
Many thanks

 

[Scalloway]

Did you owe the company any money when it was dissolved?

 

[Blaby Loyal]

If the amount claimed by HMRC is against the limited company (now dissolved) then the debt rests with that dissolved company i.e. it died with the company.

I am not aware that you, as a former director, would become personally liable for the old company's debts.

 

[DaveM36]

Did you owe the company any money when it was dissolved?

Hi,
I used the spongebob plan HMRC objected they were the only objector nobody else was owed then after two DS01s the company was dissolved by Companies House. Corp Tax was only money owed.

 

[MikeJ]

That's not the question he asked. Did you owe the company any money, as a director's loan?

 

[Lisa Thomas]

You can ignore the debt as the Company which owes the debt has died.

But... beware the very (very) slim chance that HMRC could resurrect the Company and Liquidate it.

The Liquidator could then pursue you for any Director Loan Account etc that you owe to the Company for drawings etc.

 

[Paul Norman]

The question here is whether or not it was a Ltd company. If so, they will not be able to recover the money. You do not owe the money, the company does. And the company is no more, and has no money

 

[DaveM36]

That's not the question he asked. Did you owe the company any money, as a director's loan?

Sorry Mike, No i did not

 

[DaveM36]

The question here is whether or not it was a Ltd company. If so, they will not be able to recover the money. You do not owe the money, the company does. And the company is no more, and has no money

Hi Paul, yes it was a limited company

 

[Blaby Loyal]

Just let things be as they are.

 

[DaveM36]

Appreciate everybody’s replies and help many thanks

 

[Lisa Thomas]

The question here is whether or not it was a Ltd company. If so, they will not be able to recover the money. You do not owe the money, the company does. And the company is no more, and has no money

I'm not sure how it could have been dissolved if it wasn't a Ltd Company.

 

[parkingandsecurity]

what has to be more alarming is the amount of money HMRC spend on chasing these sort of debts. A simple 30 second check can tell if the company is still active. Writing to the companies registered address can almost be totally fruitless as many postal box companies wont even have a real location and the mail would just "bounce". Total waste of money and when does it stop ?

 

[Scalloway]

HMRC probably hope the directors of dissolved companies will stump up from their own pockets.

 

[SteveHa]

Questions like this will all stop when FA2019 receives royal assent, since that will include specific provisions to make director's personally liable for debts of third party taxes (i.e. PAYE, CIS, VAT etc.).

 

[Lisa Thomas]

what has to be more alarming is the amount of money HMRC spend on chasing these sort of debts. A simple 30 second check can tell if the company is still active. Writing to the companies registered address can almost be totally fruitless as many postal box companies wont even have a real location and the mail would just "bounce". Total waste of money and when does it stop ?

I believe HMRC are clamping down on Directors dissolving companies next year so will be interesting to see how it pans out.

 

[GeoMal]

Questions like this will all stop when FA2019 receives royal assent, since that will include specific provisions to make director's personally liable for debts of third party taxes (i.e. PAYE, CIS, VAT etc.).

This sounds sensible in many circumstances. Any timetable for this?

 

[SteveHa]

This sounds sensible in many circumstances. Any timetable for this?

Effective WEF 6 April 2020.

 

[GeoMal]

Effective WEF 6 April 2020.

Good, should stop those who deliberately close companies having spent the VAT. A bit scary in principle though to those whose companies genuinely fail whilst owing VAT, which I guess is the case in most genuine failures.

 

[Newchodge]

Questions like this will all stop IF FA2019 receives royal assent, since that will include specific provisions to make director's personally liable for debts of third party taxes (i.e. PAYE, CIS, VAT etc.).

I've changed your post a little, given current little local difficulties within the government!

 

[SteveHa]

I've changed your post a little, given current little local difficulties within the government!

Whilst I take your point, anything that accelerates payments or prevents loss to the exchequer tends to stay in place regardless of who is in power.

 

[Blaby Loyal]

The proposal to make directors of limited companies personally liable for amounts owed to HMRC doesn't sit comfortably with me.

Why should they get that protection over and above the trade creditors and employees for that matter.

Even with the proposed amendments to HMRC's status as creditors in formal insolvencies they will only be 'deferred' preferential creditors.

How will it be enforced for directors who resign, say, a year previously?

Ooooh Tommy Robinson will sort it all out for us

 

[SteveHa]

Until I see the precise legislation (which hasn't been written yet) I can only speculate. However, typically, such legislation has checks and balances, and more importantly, protection built in to prevent unjust accountability being built in.

You have to remember that the debts are not akin to trade debts. VAT, PAYE and CIS were never the company's money in the first place. They simply collect as agents for HMRC, and should pay over to HMRC close to immediately (PAYE/CIS at the month end, and VAT at the quarter end). It is not intended to be, nor should it be used as, general funds in the intervening period.

Or are you advocating that it is right and proper that a director can use such funds for personal use before closing down a company with no recourse, denying HMRC the benefit of tax paid by others, and the tax that the director should have paid on the "income"?

 

[Newchodge]

Until I see the precise legislation (which hasn't been written yet) I can only speculate. However, typically, such legislation has checks and balances, and more importantly, protection built in to prevent unjust accountability being built in.

You have to remember that the debts are not akin to trade debts. VAY, PAYE and CIS were never the company's money in the first place. They simply collect as agents for HMRC, and should pay over to HMRC close to immediately (PAYE/CIS at the month end, and VAT at the quarter end). It is not intended to be, nor should it be used as, general funds in the intervening period.

Or are you advocating that it is right and proper that a director can use such funds for personal use before closing down a company with no recourse, denying HMRC the benefit of tax paid by others, and the tax that the director should have paid on the "income"?

I agree in principle. It's a bit like (in the days that some of you may remember) an employee collecting their cards when they leave a job and finding that the employer hadn't bought the stamps to put on their card (with the money taken from the employee) so the employee could not get state benefits or the right pension when they retired. Very common in the building trade, I seem to recall!

 

[GeoMal]

You have to remember that the debts are not akin to trade debts. VAT, PAYE and CIS were never the company's money in the first place. They simply collect as agents for HMRC, and should pay over to HMRC close to immediately (PAYE/CIS at the month end, and VAT at the quarter end). It is not intended to be, nor should it be used as, general funds in the intervening period.

Sure, but unless the collected taxes are ringfenced in a separate account, which has its own problems as VAT, for example, is not collected separately from other revenue, then at any one point HMRC is likely to lose up to one quarter's worth.

If there is more than one quarter's worth of VAT owed then clearly the VAT has been used elsewhere and this is where legislation could help.

As for relying on HMRC to not rely upon unjust accountability, that scares me somewhat.

 

[Blaby Loyal]

"Or are you advocating that it is right and proper that a director can use such funds for personal use before closing down a company"

Where does personal use come in to it? It doesn't. An unpaid debt to HMRC can arise for a multitude of genuine reasons. Faced with a close down and the decision of whether to pay employees at, say, Christmas or HMRC then I know which one I'd choose every time.

 

[Mr D]

Sure, but unless the collected taxes are ringfenced in a separate account, which has its own problems as VAT, for example, is not collected separately from other revenue, then at any one point HMRC is likely to lose up to one quarter's worth.

If there is more than one quarter's worth of VAT owed then clearly the VAT has been used elsewhere and this is where legislation could help.

As for relying on HMRC to not rely upon unjust accountability, that scares me somewhat.

Why could VAT not be ringfenced each day or each week into a different account?

What is the unknown factor?

The business will presumably have (or be able to pull) sales figures or estimates of sales where VAT has been collected.
Or will have an idea of what percentage of total sales the VAT bill payable will be. And can transfer that money.

Its a few minutes a week or a month.

 

[GeoMal]

Why could VAT not be ringfenced each day or each week into a different account?

What is the unknown factor?

The business will presumably have (or be able to pull) sales figures or estimates of sales where VAT has been collected.
Or will have an idea of what percentage of total sales the VAT bill payable will be. And can transfer that money.

Its a few minutes a week or a month.

So you are volunteering to do a VAT return daily? No thanks, it's bad enough being an unpaid tax collector with a quarterly return.

What happens when the return is negative, that is a VAT repayment is due? Are you suggesting HMRC staff up to allow daily repayments?

 

[SteveHa]

Where does personal use come in to it? It doesn't. An unpaid debt to HMRC can arise for a multitude of genuine reasons.

There is absolutely no genuine reason for not handing over taxes collected as an agent for HMRC (i.e. VAT, PAYE and CIS). The entity doing the collecting has no entitlement to use of that money for anything else at all.

 

[Mr D]

So you are volunteering to do a VAT return daily? No thanks, it's bad enough being an unpaid tax collector with a quarterly return.

What happens when the return is negative, that is a VAT repayment is due? Are you suggesting HMRC staff up to allow daily repayments?

Who suggested doing vat return daily?
I did not.

Pulling money from bank account to another account takes seconds. How long does calculating a percentage of sales take?

I've done it weekly for a mix of full and zero rated items as part of my procedures across multiple accounts and currencies in a matter of minutes. Per week.

Then when the VAT return is done you have most / all the payment already put aside in a separate account. And that money hasn't been spent on anything else.