Company dissolved accidentally - NEED HELP

[businessfirst1]

Hi all,

Firstly thanks for reading

I recently had a company that while it did trade, sales were tiny. Less than £5k in total sales. Due to some personal issues, I stopped working on the business, and also, the accounting & filing records. Because we didn't submit any returns, the company was dissolved (compulsory) by companies house, and despite having a VAT assessment HMRC never objected. After the company was dissolved a few months back, I realised we owed money. I submitted VAT returns via the government gateway as it still let me, and my returns stated I owed £800 in VAT, though the system said I owed nothing? Assuming because the company was dissolved.

I have SOME of the invoices, but I have all the bank statements and a complete spreadsheet of all transactions. The company never made a profit, actually a loss, so I assume it doesn't owe any corporation tax. I invested £1200 into the business, but only ever withdrew £700, so I didn't have an OVERDRAWN DLA (I don't think).

Now I know I owe HMRC £800 in VAT, and I'm really worried this will come back to haunt me. It's a very small sum compared to many, I know, but I'm no tax evader. I'm a young, avid entrepreneur and my biggest fear is I'll be investigated & disqualified as a director and lose the ability to run another business. Although this is very unlikely, I cannot shake the feeling of "looking over my shoulder". I believe I have effectively performed the SpongeBob plan without meaning to.

I was thinking of applying for an administrative restoration, filing ALL accounts, paying all bills (out of my own pocket - my mistakes so I'm willing to pay for them) and then finally dissolving the company once and for all with NO outstanding debts.

Would doing this cause more trouble? Ultimately, I just want to be honest with HMRC and avoid any repercussions. Some personal life issues caused me to be a bit lazy and careless for a little while but I'm by no means dishonest or a crook!

I'd appreciate any advance. Thanks all!

 

[paulears]

Can you just not pay what you owe, and I find the idea that people will chase you? To be struck off, you need to have done certain things? Being a director of a failed company rarely causes people grief, with skulduggery of some kind taking place? It sounds to me, as a non-expert, a bit daft to start up and shut down again?

 

[MBE2017]

Have a chat with your accountant.

 

[Ian J]

Have a chat with your accountant.

 

[businessfirst1]

Can you just not pay what you owe, and I find the idea that people will chase you? To be struck off, you need to have done certain things? Being a director of a failed company rarely causes people grief, with skulduggery of some kind taking place? It sounds to me, as a non-expert, a bit daft to start up and shut down again?

Hi Paul, yes this is true, but the while no dishonest or fraudulent activity was taking place the businesses accounts were a bit of a mess at the time of dissolution. This makes me afraid that HMRC will investigate further, and the lack of accounts could result in director disqualification.

If I get the business up again, submit everything outstanding and pay everything, it gives me peace of mind knowing I've been honest & don't risk disqualification. That terrifies me, and the biggest issue isn't the money, it's the constant feeling of uncertainty.

 

[DontAsk]

With such low turnover was there any real benefit being registered for VAT?

 

[businessfirst1]

With such low turnover was there any real benefit being registered for VAT?

Hi there, no there wasn't. I was misinformed at the time, and thought I needed to be registered.

Ultimately I didn't, but we can't change the past unfortunately. My current accountant is advising me to simply keep the company dissolved, but it seems fraudulent, and dishonest.

 

[Gyumri]

The correct thing is to do exactly what you think is right because it actually is right. Apply to restore the company, complete the very simple accounts required - an accountant or bookkeeper can assist - pay the vat due- and then pay £10 to close the company if you don't need it any more.

With such honesty as you have exhibited you can't fail to become very successful in your business life.

 

[businessfirst1]

The correct thing is to do exactly what you think is right because it actually is right. Apply to restore the company, complete the very simple accounts required - an accountant or bookkeeper can assist - pay the vat due- and then pay £10 to close the company if you don't need it any more.

With such honesty as you have exhibited you can't fail to become very successful in your business life.

Hi Gyumri, thanks for the kind words. I know there's a lot of crooks out there who regularly try to avoid debts, and that's not me. Current accountant advises me not to worry and that keeping it dissolved is best, but the constant looking over your shoulder feeling has me extremely stressed.

 

[StevensOnln1]

HMRC are never going to investigate you over £800 which was owed by the company (which no longer exists) NOT you personally. It would cost far more than that to restore the company and carry out an investigation. Even if they did you would never be disqualified for something as minor as failing to file accounts and a small unpaid tax debt.

 

[Scalloway]

The company is dead and the debt died with it. Move on and forget it.

 

[Gyumri]

Even if they did you would never be disqualified for something as minor as failing to file accounts and a small unpaid tax debt.

You are quite right but the point made by the OP is to be commended. He recognises that HMRC are owed a small sum and it is right what you say about nobody's going to bother chasing the debt but for the sake of his own feeling of integrity he wants to rectify the position. If only there were more people with that attitude. There is no doubt that the OP will do very well in business.

 

[Lucan Unlordly]

You are quite right but the point made by the OP is to be commended. He recognises that HMRC are owed a small sum and it is right what you say about nobody's going to bother chasing the debt but for the sake of his own feeling of integrity he wants to rectify the position. If only there were more people with that attitude. There is no doubt that the OP will do very well in business.

The OP could always make a donation to charity if he needs to sleep at night.........

 

[Gyumri]

You are right. HMRC have a retired tax officers association!

 

[Ian J]

The company is dead and the debt died with it. Move on and forget it.

Seconded

 

[Chris Parkman]

If it was me I would leave the Company dissolved and move on.

 

[kulture]

It is the company that owes the VAT not you. HMRC is not going to investigate over £800. The company is gone. Let it remain gone.

 

[Lisa Thomas]

You could leave it and let this die however, if you are that concerned and stressed about it morally, then you could simply pay HMRC out of your own pocket.

I wouldn't bother going through the rigmarole of reinstating the company.

 

[businessfirst1]

You could leave it and let this die however, if you are that concerned and stressed about it morally, then you could simply pay HMRC out of your own pocket.

I wouldn't bother going through the rigmarole of reinstating the company.

Hi Lisa,

The biggest stress is the fear of being disqualified as a director

I could pay the VAT, but would HMRC not investigate me as I never submitted corp tax, accounts, or PAYE (I had some specific charges from PAYE).

Would a company that filed & paid VAT returns, but no accounts or anything else not flag up?

As I said - ultimate fear is director disqualification

Thanks!

 

[Scalloway]

You would have to owe HMRC a hell of a lot more before they would even start to look at director disqulification.

And it is a process that would take a period of time to go through. First HMRC would appoint a receiver to look at the company and how it was run. Then they need to go to the court if they thought there was criminal conduct.

£800 wouldn't cover the receiver's fees so no financial benefit to HMRC.

 

[businessfirst1]

You would have to owe HMRC a hell of a lot more before they would even start to look at director disqulification.

And it is a process that would take a period of time to go through. First HMRC would appoint a receiver to look at the company and how it was run. Then they need to go to the court if they thought there was criminal conduct.

£800 wouldn't cover the receiver's fees so no financial benefit to HMRC.

Hi Scalloway,

This was initially my thought, and you make a good point. Would me never filing any accounts or PAYE just VAT make a difference? HMRC don't actually know how much money ever came in or out of the company, how much VAT.

Would they not consider the messy accounts enough of an excuse to launch a further investigation into conduct?

Thanks

 

[Scalloway]

Companies fail to file accounts and get struck off all too regularly. It is a method regularly used by fraudsters as they know HMRC and Companies House lack the resources to follow up any suspicions they might have.

You can read about some recent director disqualifications here. You will see the sums involved are considerable.

Director disqualification outcomes: summary of results

The Service is an Executive Agency of the Department of Trade & Industry which deals with insolvency matters in England & Wales and some limited insolvency matters in Scotland. The Redundancy Payments Service is part of The Insolvency Service and deals with redundancy and associated payments in...

www.insolvencydirect.bis.gov.uk

 

[StevensOnln1]

HMRC would never have the resources to investigate every company that failed to file accounts. They're far too busy going after people who owe tens or hundreds of thousands.

 

[businessfirst1]

Companies fail to file accounts and get struck off all too regularly. It is a method regularly used by fraudsters as they know HMRC and Companies House lack the resources to follow up any suspicions they might have.

You can read about some recent director disqualifications here. You will see the sums involved are considerable.

Director disqualification outcomes: summary of results

The Service is an Executive Agency of the Department of Trade & Industry which deals with insolvency matters in England & Wales and some limited insolvency matters in Scotland. The Redundancy Payments Service is part of The Insolvency Service and deals with redundancy and associated payments in...

www.insolvencydirect.bis.gov.uk

Hi Scalloway,

That's putting my mind at ease a little. Even though I have an outstanding bill of £800 for VAT, I'm assuming HMRC will also charge interest every day this is outstanding? Would they count this towards what I owe?

I haven't had anything to say they did charge interest but according to google, the interest charge is only raised when the amount is paid. The interest is 3.25% daily, and this could amount to tens of thousands..

 

[paulears]

People are telling you it is not YOU, it is the company, and if the company is dead, then HMRC aren't really expecting a Director to want to pay it. However - if you voluntarily pay them the money, I doubt they will reject it. Have you thought about having a chat with them and just asking?

 

[Scalloway]

HMRC will not charge a penalty if this is the first time the VAT is paid late.

Sending a VAT Return

How to do a VAT Return, pay your VAT bill, correct errors in your VAT Return, what to do if you're late with your return or payment.

www.gov.uk

 

[businessfirst1]

HMRC will not charge a penalty if this is the first time the VAT is paid late.

Sending a VAT Return

How to do a VAT Return, pay your VAT bill, correct errors in your VAT Return, what to do if you're late with your return or payment.

www.gov.uk

And HMRC wouldn’t really care that I withdrew a tiny amount of money from the company but didn’t pay VAT? Is this favouring creditors?

When I withdrew the money the company was trading, solvent, but hadn’t yet filed VAT returns or paid VAT

 

[Scalloway]

AS I said before the company is dead and any debts died with it. For £800 HMRC are not in the least interested.

You are worrying needlessly.

 

[kulture]

And HMRC wouldn’t really care that I withdrew a tiny amount of money from the company but didn’t pay VAT? Is this favouring creditors?

When I withdrew the money the company was trading, solvent, but hadn’t yet filed VAT returns or paid VAT

The company is dead. It does not exist. You do not owe anything. You should stop worrying and move on. HMRC are not going to do anything over £800 other than write a few letters and threaten dire consequences. It is all a bluff.

It would cost them thousands to do anything and that would likely gain them nothing. They know this. So they will not waste their time.

 

[Dinky]

Companies fail to file accounts and get struck off all too regularly. It is a method regularly used by fraudsters as they know HMRC and Companies House lack the resources to follow up any suspicions they might have.

You can read about some recent director disqualifications here. You will see the sums involved are considerable.

Director disqualification outcomes: summary of results

The Service is an Executive Agency of the Department of Trade & Industry which deals with insolvency matters in England & Wales and some limited insolvency matters in Scotland. The Redundancy Payments Service is part of The Insolvency Service and deals with redundancy and associated payments in...

www.insolvencydirect.bis.gov.uk

Interesting read! Crazy to see many of those struck off are due to Bounce Bank loans being used against T&C of agreement, i.e. mostly withdrawn straight into directors personal account.

 

[Mr D]

Interesting read! Crazy to see many of those struck off are due to Bounce Bank loans being used against T&C of agreement, i.e. mostly withdrawn straight into directors personal account.

Is it so strange that directors need to eat?