Closing down a limited company that owes HMRC

[helenr1981]

Hi, I came across this website on Google and was hoping for some advice and guidance please.

My husband has a Limited company that he is sole director of (there was another Director that walked away 4 years ago), it's been going for 5 years now and it's just not working and it's causing a lot of stress and worry. There are no staff, just him, and the only debts owed are to HMRC of approx £9k for Corporation Tax. He hasn't had much work on this year (he's an interior designer) and of the projects he has done the last 2 have turned bad and resulted in losing money that he/we don't have, to the point kids savings have been used to try and get the projects finished, which I wasn't happy about but wanted to help him out as he was hopeful it'd get better. It hasn't and now it needs winding up as it's just not worth it, the debt to HMRC, parents and kids account can't be recouped with this failing business.

He works from home, where the company is registered, which is just in my name as as I bought it before meeting him- is our home safe, can HMRC force anything upon us to recoup what they're owed?

He's finishing his final project within the next week with the outstanding balance all going to trades, once this has happened how does he go about closing down the business/making it insolvent? The company has no assets or money to pay back HMRC, what will they do to get money back? He will be seeking employment of some sort, will they then come to him personally to pay these business debts on some kind of monthly payment basis when gets a job?

I'm so worried about it being registered at our home, even though it's just in my name and not his, and the effect it's having on him and us as a family. Not knowing how to go about it and the unknown is scary. We can't afford to pay anyone for advice so any help you can give would be so gratefully received as to how he goes about this, thanks in advance.

 

[StevensOnln1]

Corporation tax debt are owed by the company, not your husband personally. There is no possibility of your home being at any sort of risk in relation to this. Take a read of the Spongebob plan which is detailed in a sticky thread at the top of the Insolvency forum, it explains the process of ceasing trading and applying for the company to dissolved.

 

[helenr1981]

Thanks for your reply, I've had a read of the SpongeBob Plan and it's helped a lot, thank you. So as HMRC are the only debt, aside from family, they need to be sent the letter stating the company has ceased trading then follow the rest of the steps thereafter? This page is a godsend already, just knowing they can't come after us personally is a relief, thank you

 

[ethical PR]

Are you sure there is any corporation tax due? You said that the work he has had over the couple of years has lost money and that any money has gone to tradesmen.

If this is the case surely there wouldn't have been enough profit for him to owe 9000 in corporation tax?

 

[helenr1981]

On asking him further it would seem the approx £9k is for HMRC in corporation tax, VAT and self assessments. He's not been good at paying these things, work was alright the first 3 years, last year was a struggle and this year even more so but he currently pays HMRC monthly for these three things to cover the last few years. It's the remainder of this final project where the last payment is solely for trades. We're going to look at the SpongeBob plan more thoroughly later once the kids are settled and sorted.

 

[StevensOnln1]

You mentioned self assessment debts, those are personal and not debts owed by the company. You need to work out how much is owed personally and how much is company debt.

 

[Chrismckay]

If there is some self assessment debts and he has lent money to the Company that will not be repaid, he may be able to claim this against the income that gave rise to the tax and reduce the tax. You would need to speak to an accountant to see if this is possible

 

[UK Contractor Accountant]

If there is some self assessment debts and he has lent money to the Company that will not be repaid, he may be able to claim this against the income that gave rise to the tax and reduce the tax. You would need to speak to an accountant to see if this is possible

Only CGT loss relief avalailable for loss on debt. Income tax relief may be claimed on the loss on the share capital held by directors/shareholder.