Considering Spongebob, but many questions....

[Fuzz4444]

Hello all,
I am a one man company. I was advised to set up as a Ltd company 15 years ago due to income of around £100k.
I have recently fallen terribly behind with my accounts and am also drowning in debt both personally and through the company.
I live in rented accommodation, drive a very old car and have pretty much no assets. (My job just requires me to turn up and operate equipment provided).

I have a company account £13k overdraft which I believe it personally guaranteed
I have a bounceback loan of £15k which was applied for above board and used to pay immediate debts to HMRC.

I have outstanding VAT of £15k which has been passed to a debt collection agency and is currently on a month's hold.
I am very behind with corporation tax accounts (just over a year) and have received my first £100 fine for this.
I have existing Corporation Tax debt of £4500 that has been placed on hold until my accounts are submitted - at which point I'm expecting at least an additional bill of £15k

I have personal debts of £20k in loans I took out to pay previous tax bills

I have had one letter from Companies House threatening to close the company, to which I replied "I want to keep my company".
I had a subsequent letter giving me 30 days to either file full accounts, or apply to strike off the company.

My accountant always advised me to simply use my company bank account as a 'big bucket' where my money was and he'd sort out what was business and what wasn't and file accounts accordingly, using (I think) company dividends as the way I spent personal expenses.
(I always hated this as I never really understood it)

Striking off the company and starting again 'clean' is obviously hugely appealing, but seems too good to be true.
I also wonder how I would go about submitting Self-Assessment returns in January, as I don't have proper accounts for the year ending April this year.

I could probably borrow the £5k for a proper IP from family or friends, so I do wonder if a proper IP would be safer and less stressful - but I do worry I will still end up owing money to my bank and to HMRC through assets, or through some debt I owe the company from dividends if the IP does necessary final accounts.

I am basically terrified and feel completely alone and trapped.
Any help gratefully received. Judgements not really helpful as I'm already pretty low.

Thanks.

Edit: I'm still able to earn. Not quite in the £100k a year range, but not far below. I do wonder if I should make the effort to keep the company going and try to trade my way out of this mess. I just feel like I'm constantly slipping further and further back and will never catch up - only get further behind.

 

[Chris Ashdown]

I lost my company after months of worry, and after talking to a local IP, signed up to there services and lived happily the next day with full nights sleep. never regretted it. Just my experience. SpongeBob apparently can go on for years

 

[tracey.]

....could I ask what is SpongeBob and also what is a local IP ?

 

[WaveJumper]

....could I ask what is SpongeBob and also what is a local IP ?

SpongeBob read here:

CLOSING A LIMITED COMPANY WTH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER

CLOSING AN INSOLVENT LIMITED COMPANY WITH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER If a company is unable to carry on trading due to becoming insolvent the standard procedure for closing it down is for the directors to appoint an Insolvency Practitioner to liquidate it...

www.ukbusinessforums.co.uk

IP = Insolvency Practitioner

 

[WaveJumper]

You need to seek proper professional advice, is your accountant currently sorting out your late submission of accounts. No expert in these matters but plenty of IP's on the forum who I am sure will be along to point you in the right direction.

In the mean time I would double check everything which you think has a PG attached and sit down with your accountant and get a firm handle on exactly where you stand and of course make sure you have claimed for everything possible.

HMRC I am pretty sure unfortunately won't let a Ltd company just be struck off these days where there is a BL outstanding. Speak to an IP, there are as I mentioned many on here and if they offer s free phone call take them up on the offer.

 

[Fuzz4444]

Accountant is not yet prepping end accounts, as I don't have my receipts etc in order.

I spoke to an IP that advertised online and they said they could take care of all of that.
I felt like I was talking to a salesman though, as the guy basically just kept repeating "you've got nothing, so it'll be easy and you'll just walk away" - it just seemed so easy and without any risk according to his telling that I decided I didn't trust him. He just constantly seemed to be saying he'd wave a magic wand and it would all disappear.

It made me think that once they'd had my £5k, I'd suddenly start hearing a very different story.
Are there such things as insolvency sharks?

 

[Ian J]

Are there such things as insolvency sharks?

Oh yes.

 

[tracey.]

I once worked for a business which went into administration but kept trading ...the practitioner disappeared off the face of the earth not only with his substantial fee but a huge chunk of money from sold assets which had been sold to pay creditors. Someone who worked on the sales team at said business left and set up his own business doing IVA's etc.

 

[japancool]

My accountant always advised me to simply use my company bank account as a 'big bucket' where my money was and he'd sort out what was business and what wasn't and file accounts accordingly, using (I think) company dividends as the way I spent personal expenses.
(I always hated this as I never really understood it)

Oooo, this does not sound like good advice!

Even if you're able to strike off the company (which currently is unlikely, as you have a BBL), any debts that you personally guaranteed will still be with you. If you are able to early nearly 100k a year, the debts do not sound onerous. Why are you in such a financially difficult position? It surely can't just be because you are late with your accounts.

If you are having to borrow to keep the company running, it's time to consider if it really is viable. As it is, you may be trading insolvently, which would be breaking the law.

You can speak to HMRC about a time to pay agreement for debts you have with them.

Why are you so far behind with your accounts, and how long is it going to take for you to get them filed?

 

[japancool]

Accountant is not yet prepping end accounts, as I don't have my receipts etc in order.

I spoke to an IP that advertised online and they said they could take care of all of that.
I felt like I was talking to a salesman though, as the guy basically just kept repeating "you've got nothing, so it'll be easy and you'll just walk away" - it just seemed so easy and without any risk according to his telling that I decided I didn't trust him. He just constantly seemed to be saying he'd wave a magic wand and it would all disappear.

It made me think that once they'd had my £5k, I'd suddenly start hearing a very different story.
Are there such things as insolvency sharks?

There are some who are not entirely trustworthy, but most should be and the ones on this forum certainly are. @Chris Callaghan @Lisa Thomas

However, understand that once appointed, their duty is to act in the best interests of the creditors, not in yours. If you don't know the state of the accounts, or even if you may have an overdrawn director's loan account, you may find some nasty surprises lurking. Seriously, your first priority should be to get a full understand of your true financial position before you take any other action.

 

[Gyumri]

I have a company account £13k overdraft which I believe it personally guaranteed

I have personal debts of £20k in loans I took out to pay previous tax bills

The company will just have to go dormant until HMRC or some creditor winds it up. It's debts are not yours.

The £13,000 is something you might want to service as well as the £20,000 in personal unsecured debts, payable from your current and future earnings. If not, then it's time to apply to make yourself bankrupt and those debts will be wiped out.

The process can be started online from the comfort of your armchair:

Apply for bankruptcy

How to apply for bankruptcy online: how much it costs, get help paying the fee, what you’ll need

www.gov.uk

 

[japancool]

The £13,000 is something you might want to service as well as the £20,000 in personal unsecured debts, payable from your current and future earnings. If not, then it's time to apply to make yourself bankrupt and those debts will be wiped out.

Really, really poor advice. The OP states that they still earn (or are able to earn) nearly £100,000 a year. If they become bankrupt, anything beyond what the bankruptee needs to live will likely go towards any debts they owe. In addition, for £33,000, there are other, far less drastic options.

OP - do NOT do this until you have spoken to a licensed insolvency practitioner and fully understood the ramifications of doing so.

 

[Gyumri]

Really, really poor advice. The OP states that they still earn (or are able to earn) nearly £100,000 a year.

It's not the company that the OP needs to worry about which should be left as a dormant company as it has no future.

If the OP appoints an IP then he will be obliged to account for the state of the company's affairs and possibly any director's loan, which it seems (without casting judgment) the OP is unable to do.

You are right in that if the OP intends to and can service the PG loan and unsecured personal debts from his earnings then he should do that, as bankruptcy is the last resort

 

[Lisa Thomas]

The company will just have to go dormant until HMRC or some creditor winds it up. It's debts are not yours.

The £13,000 is something you might want to service as well as the £20,000 in personal unsecured debts, payable from your current and future earnings. If not, then it's time to apply to make yourself bankrupt and those debts will be wiped out.

The process can be started online from the comfort of your armchair:

Apply for bankruptcy

How to apply for bankruptcy online: how much it costs, get help paying the fee, what you’ll need

www.gov.uk

Unless you are licensed by the FCA, you should not be giving out personal insolvency advice.

Bankruptcy MAY be a suitable option but there are alternatives that should also be explored!

 

[Lisa Thomas]

Hello all,
I am a one man company. I was advised to set up as a Ltd company 15 years ago due to income of around £100k.
I have recently fallen terribly behind with my accounts and am also drowning in debt both personally and through the company.
I live in rented accommodation, drive a very old car and have pretty much no assets. (My job just requires me to turn up and operate equipment provided).

I have a company account £13k overdraft which I believe it personally guaranteed
I have a bounceback loan of £15k which was applied for above board and used to pay immediate debts to HMRC.

I have outstanding VAT of £15k which has been passed to a debt collection agency and is currently on a month's hold.
I am very behind with corporation tax accounts (just over a year) and have received my first £100 fine for this.
I have existing Corporation Tax debt of £4500 that has been placed on hold until my accounts are submitted - at which point I'm expecting at least an additional bill of £15k

I have personal debts of £20k in loans I took out to pay previous tax bills

I have had one letter from Companies House threatening to close the company, to which I replied "I want to keep my company".
I had a subsequent letter giving me 30 days to either file full accounts, or apply to strike off the company.

My accountant always advised me to simply use my company bank account as a 'big bucket' where my money was and he'd sort out what was business and what wasn't and file accounts accordingly, using (I think) company dividends as the way I spent personal expenses.
(I always hated this as I never really understood it)

Striking off the company and starting again 'clean' is obviously hugely appealing, but seems too good to be true.
I also wonder how I would go about submitting Self-Assessment returns in January, as I don't have proper accounts for the year ending April this year.

I could probably borrow the £5k for a proper IP from family or friends, so I do wonder if a proper IP would be safer and less stressful - but I do worry I will still end up owing money to my bank and to HMRC through assets, or through some debt I owe the company from dividends if the IP does necessary final accounts.

I am basically terrified and feel completely alone and trapped.
Any help gratefully received. Judgements not really helpful as I'm already pretty low.

Thanks.

Edit: I'm still able to earn. Not quite in the £100k a year range, but not far below. I do wonder if I should make the effort to keep the company going and try to trade my way out of this mess. I just feel like I'm constantly slipping further and further back and will never catch up - only get further behind.

Hello Fuzz

Sorry to hear about your predicament.

There is too much to cover here, and more information needed to give you full advice. I really would need to chat to you to let you know what option I think is best for the company in its circumstances.

However here are some thoughts based on what's been said so far:

Yes Liquidation may be the best option to wind the company down in a formal manner. A compulsory liquidation in court is probably the cheapest option initially.

Yes you can find an IP who is willing to do this for you for £5k (plus VAT).

Yes the liquidator acts in the best interest of the company and its creditors as a whole and has a duty to investigate what went wrong, and whether you have committed any misconduct that can be pursued.

However if you haven't committed any misconduct this won't be a problem.

It is possible you have drawn unlawful dividends as the company appears to be insoolvent, to the tune of c£50k. This means the 'dividends' will probably be classed as overdrawn director loans by the accountant. That technically means its a debt you owe the company back. Any liquidator appointed will have to call this debt in. However it sounds like you may be personally insolvent, so likely that you won't be able to pay all/any of this back so it might become academic.

You have suggested continuing on. Sounds like the company will need to make £50k net profit to be able to break even.

I wonder if part of the problem may be due to your drawings. Perhaps there is a viable business there, if you can sort that out. The Accountant should be able to look at that when they review the drawings taken.

I'd be very happy to chat to you further about your options.

A starting point might be to have a look at my video:

- YouTube

Enjoy the videos and music that you love, upload original content and share it all with friends, family and the world on YouTube.

youtu.be

Also happy to talk to you about dissolution ("spongebob") and whether it's suitable here.

Our chat will be free, confidential and non obligational.

 

[WaveJumper]

Hello Fuzz

Sorry to hear about your predicament.

There is too much to cover here, and more information needed to give you full advice. I really would need to chat to you to let you know what option I think is best for the company in its circumstances.

However here are some thoughts based on what's been said so far:

Yes Liquidation may be the best option to wind the company down in a formal manner. A compulsory liquidation in court is probably the cheapest option initially.

Yes you can find an IP who is willing to do this for you for £5k (plus VAT).

Yes the liquidator acts in the best interest of the company and its creditors as a whole and has a duty to investigate what went wrong, and whether you have committed any misconduct that can be pursued.

However if you haven't committed any misconduct this won't be a problem.

It is possible you have drawn unlawful dividends as the company appears to be insoolvent, to the tune of c£50k. This means the 'dividends' will probably be classed as overdrawn director loans by the accountant. That technically means its a debt you owe the company back. Any liquidator appointed will have to call this debt in. However it sounds like you may be personally insolvent, so likely that you won't be able to pay all/any of this back so it might become academic.

You have suggested continuing on. Sounds like the company will need to make £50k net profit to be able to break even.

I wonder if part of the problem may be due to your drawings. Perhaps there is a viable business there, if you can sort that out. The Accountant should be able to look at that when they review the drawings taken.

I'd be very happy to chat to you further about your options.

A starting point might be to have a look at my video:

- YouTube

Enjoy the videos and music that you love, upload original content and share it all with friends, family and the world on YouTube.

youtu.be

Also happy to talk to you about dissolution ("spongebob") and whether it's suitable here.

Our chat will be free, confidential and non obligational.

@Fuzz4444 take Lisa up on the offer of a free chat

 

[Elliot Green]

Seems like you need to speak to an IP about the situation in the first instance.

Happy to have a chat with no obligation. My details are below.