Company is about to be wound up/self assessment problem

Discussion in 'Insolvency' started by Worried sick, Apr 3, 2020.

  1. Worried sick

    Worried sick UKBF Newcomer Free Member

    1 0
    Having completely messed up, I wondered if anyone on here had experience or advice on this fairly major problem I've just come across.

    I've run a business which was on the edge a bit at the turn of the year and has died a death very recently, right at the time the corporation tax was due which we couldn't afford to pay. So, the HMRC are going through the motions, the notice is in the gazette and the company will be struck off in a couple of months.

    The ridiculous mistake I've made is that doing mine and my wife's self assessments, I've completely miscalculated her payments, as she has another job and was a director by name only with our company, but taking dividends. I've never had a bill before under self assessment, when I've always earned a small salary and around £40k in dividends, but that's always been done via an accountant. This time, I've done it because we can't afford one.

    I thought the dividends were not taxable at self assessment and put through that she earned £0 salary from the company, so she doesn't owe any tax.

    I was speaking to a friend about the situation and he thinks we'd owe around £7k or £8k in self assessment tax because I should have declared her dividends. We just cannot afford this at all as now I have zero income.

    The uncomfortable question is, will HMRC investigate my wife personal accounts in a business that has been struck off? I appreciate this isn't moral or right in any way, but we've 3 kids and could lose everything.
    Last edited: Apr 3, 2020
    Posted: Apr 3, 2020 By: Worried sick Member since: Apr 3, 2020
  2. Mr D

    Mr D UKBF Legend Free Member

    22,067 2,593
    Dividends are taxable.
    Slightly different rate and there is a small tax free allowance for dividends separate from personal tax allowance.

    Her personal tax affairs can be investigated by HMRC.

    If she ends up with a big bill then just negotiate payments when can be afforded.
    Posted: Apr 3, 2020 By: Mr D Member since: Feb 12, 2017
  3. kulture

    kulture UKBF Legend Staff Member

    8,089 2,229
    When you did her self assessment return form what did you put under the dividend section? Because you are correct to put £0 under salary. She earned no salary. The problem is if you put the wrong figures in the dividend section. If HMRC thinks you did this deliberately then you may face penalty charges. It may be better to go back and correct the form before they investigate.
    Posted: Apr 3, 2020 By: kulture Member since: Aug 11, 2007
  4. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,486 436
    You should correct her returns or it could be an expensive mistake if picked up in the future with penalties and interest and a potential investigation.
    Posted: Apr 6, 2020 By: Lisa Thomas Member since: Apr 20, 2015