Closing a Limited company down with oustanding directors loan

[Welshman1971]

Hello all. I have posted before on the situation of my Limited Company and was in the proceeds of following spongebobs plan. After notifying my accountant he has hit me with the bombshell that I have to file returns for last years accounts and that I could be pursued for any directors loans personally against my property. I really don't know where to go now. If he does my accounts Ill have to find his fee, which I don't really have, and presumably will still have an outstanding directors loan. Any advice would be greatly appreciated.

 

[Lisa Thomas]

Hi There. If you have an outstanding DLA then I'm afraid the dissolution route may not have been the right choice for you as the Company has assets. How much is the DLA? Do you have equity in your property? Do you have any other personal debts? Happy to discuss in more detail if you like 01752 786800.

 

[Welshman1971]

How has the company got any assets? There is nothing in company bank account. I do not have any other outstanding personal debts. The house is not company property.

 

[Lisa Thomas]

Hi if you owe an outstanding DLA to the Company it is an asset. If the Company is Liquidated the Liquidator will look to pursue you for repayment of the DLA. Any equity in your property is potentially therefore at risk.

 

[kulture]

Firstly if you have ceased trading you do not have to file the accounts. HMRC may or may not object to the process. If they do object then they may appoint a liquidator and go after any assets, specifically the Director's Loan. I.e. YOU. Of course if you have not yet filed them you have the opportunity to check them to ensure they are correct. One thing to check is whether you should have paid yourself a salary rather than a dividend or a director's loan.

 

[Lisa Thomas]

Depending on the figures involved you MAY want to consider Liquidating yourself and doing a deal with the Liquidator regarding the DLA repayment.

 

[Welshman1971]

Thanks for advice both. I'm not sure what to do now. My accountant does all my books from my Company bank statements. So is it best to let him sort the last years accounts so I know how much potentially the DLA will be?

 

[UK Contractor Accountant]

According to the last accounts filed at Companies House the company owns fixed assets which have a book value of £1.8K at May 14 as well as £15K debts due from the Directors. These values may of course change depending on the results for the May 15 year end.

The SB Plan is not really appropiate in circumstances where the company has assets so I would recommend you have a chat with @Lisa Thomas before you go any further with the SB route.

 

[Lisa Thomas]

Welcome to chat with you in more detail - feel free to contact me.

 

[Business News]

You have serious considerations here. Both with the amount of money that the HMRC will see as a benefit in kind and therefore eligible for tax and the prospect of you liquidating the limited company whilst personally owing it money. That's embezzlement.

You need to clear that directors loan with either wages or a direct repayment. If you do it as wages then you will just have to clear the income tax and national insurance due to cover the loan which would reduce your personal and your feed into the company liability from £15k to around £5k to balance the books ready for closure. You would need to clear the loan debt by whichever means or there could be tax and legal consequences for you.

I'd consider the wages route first if the company is running a negative net asset value on the balance sheet as any money paid in would then fall due to the outstanding creditors on liquidation. If you don't owe anyone anything and the company is running a positive net worth on the balance sheet then it'd just be a paper exercise with money in to clear the loan repaid back to the directors upon liquidation.

 

[Business News]

Just to provide clarification on a technicality, when I typed that any net asset balance would be repaid to the directors upon liquidation I of course mean shareholders who invariably within small private Limited companies do tend also to be the directors.

 

[Lisa Thomas]

I've only seen two cases in 13 years where Shareholders have received monies back via Lqn - if a Company has sufficient assets to be able to pay a surplus back to its Shareholders it usually means Liquidation is not necessary.

 

[Business News]

It does depend on whether the balance sheet is presently in surplus or deficit. The loan to a director could be a reason or the reason why the business doesn't have sufficient capital to carry on trading.