Contractor, can’t pay HMRC debt - please help

Discussion in 'Insolvency' started by HelpNeeded1981, Sep 14, 2018.

  1. HelpNeeded1981

    HelpNeeded1981 UKBF Newcomer Free Member

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    Please help

    I have a limited company, 5 years old, and I am in serious trouble.

    I owe HMRC approximately £50k between outstanding VAT and corporation tax. I do have a directors loan of £8k which I am paying back in full this week.

    I am currently working on a contract which is due to end in January. It is likely this contract will be extended but I don’t want to keep the company when there is no realistic option of paying the tax HMRC is owed.

    This situation has driven me to considering taking my life. I have already attempted this once in the last 3 months and I feel as though doing it properly next time around is my only option.

    The company doesn’t have any other debts, no staff, no assets.

    What should I do? I don’t have another (permanent) job to go to yet. Should I work out the remainder of my contract and then start the spongebob plan? Would putting this plan in place stop me from being able to set up another limited company in the future?

    Thank you in advance for your help. I am on the edge of a complete breakdown and I really don’t know where to turn.
     
    Posted: Sep 14, 2018 By: HelpNeeded1981 Member since: Sep 14, 2018
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

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    Get in touch with an insolvency practitioner (there are a few on the forums) and get professional advice.

    SpongeBob plan doesn't prevent you setting up a new limited company.
     
    Posted: Sep 14, 2018 By: Mr D Member since: Feb 12, 2017
    #2
  3. HelpNeeded1981

    HelpNeeded1981 UKBF Newcomer Free Member

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    Thank you for your response.

    I don’t have any money to pay an IP. And if I stop working now I would literally be homeless. I have no other money to pay rent, household bills
     
    Posted: Sep 14, 2018 By: HelpNeeded1981 Member since: Sep 14, 2018
    #3
  4. Alan

    Alan UKBF Legend Full Member - Verified Business

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    Firstly, it is only money. It really isn't worth taking your life for!

    Talk to the Samaritans, get your head into the right place.to deal with this.
     
    Posted: Sep 14, 2018 By: Alan Member since: Aug 16, 2011
    #4
  5. KAC

    KAC UKBF Enthusiast Free Member

    911 204
    Speak to an IP before you pay your director's loan back. You could potentially use the money to pay for an IP instead.

    Speak to @Lisa Thomas or @Gavin Bates who are both IPs and members on here. Their contact details are in their profiles.

    Good luck and as @Alan has said "it is only money. It really isn't worth taking your life for!"

    Helpline numbers here
     
    Posted: Sep 14, 2018 By: KAC Member since: May 7, 2017
    #5
  6. Mr D

    Mr D UKBF Legend Free Member

    9,032 913

    You don't have any money for that. But your company will when you pay it £8k.
    Or you talk with the IP about repayment.

    Regardless, speak to an IP on Monday or as soon as you can after the weekend. They may have ideas and be able to help.

    Insolvency isn't a nice thing but it can be a necessary thing. And you can get past this.
     
    Posted: Sep 14, 2018 By: Mr D Member since: Feb 12, 2017
    #6
  7. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    I have dealt with Contractor Companies with a larger tax debt than yours.

    All of them have done a deal with my IP to write of a large chunk of the Director Loan balance and pay the balance over a number of years.

    Start getting the wheels in motion by setting up a new company now and getting it registered with HMRC.
     
    Posted: Sep 15, 2018 at 6:51 AM By: UK Contractor Accountant Member since: Sep 18, 2013
    #7
  8. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Can you move your current contract to a new company, if you set one up, or to yourself as a sole trader?
     
    Posted: Sep 15, 2018 at 8:11 AM By: Newchodge Member since: Nov 8, 2012
    #8
  9. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    9,533 1,923
    These days even Bankruptcy is not seen as a big deal some even do it twice , it can offer you a clean start with no worries, so that may be a option rather than worry about a debt you cannot pay and is causing you massive problems

    As others have said talk to the Samaritans when you are feeling low and before that get a appointment with Citizens Advice in your nearest town who can give go good free advice

    I wish you all the luck for the future and definitely talk to the two above who will give great advice to assist you
     
    Posted: Sep 15, 2018 at 9:12 AM By: Chris Ashdown Member since: Dec 7, 2003
    #9
  10. SteLacca

    SteLacca UKBF Enthusiast Free Member

    941 178
    There are a couple of things to bear in mind. Your company (as a separate legal entity) owes the money to HMRC, not you. Your only debt is the DLA, which is tiny by comparison to the HMRC debt, and if repaid, will put you personally in the clear.

    If the company is insolvent, it is illegal for it to continue to trade, which means you really should be talking to an insolvency practitioner.

    As for the future, if HMRC's (what is likely to be lip service) consultation into off payroll working in the private sector results in the same position as public sector, you may find that you are PAYE in the future anyway.

    I genuinely feel for those accountancy firms that have made the contractor market their entire focus. They could find their client base decimated before long (sorry UKCA, just the way I see it. I spent 6 months at Brooksons, and am so happy I'm no longer working there - I can see the business vanishing in the next 2 - 3 years).
     
    Posted: Sep 15, 2018 at 9:39 AM By: SteLacca Member since: Jun 16, 2016
    #10
  11. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    9,533 1,923
    There is also the SPONGEBOB plan which is on a sticky on this forum which may be a avenue you would like to investigate as a free way to close a company down
     
    Posted: Sep 15, 2018 at 11:37 AM By: Chris Ashdown Member since: Dec 7, 2003
    #11
  12. Ian J

    Ian J Factoring Specialist Full Member - Verified Business

    4,642 1,306
    I can understand that HMRC might object to an attempt to dissolve the company as they will be interested to know where all the profits have disappeared to and they may issue Winding Up proceedings so that the court appointed liquidator can investigate
     
    Posted: Sep 15, 2018 at 11:52 AM By: Ian J Member since: Nov 6, 2004
    #12
  13. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    Not quite sure how you have tax debts of £50K + and only a £8K DLA.

    Anyway an IP will sort all that for you if Strike Off is not an option.
     
    Posted: Sep 15, 2018 at 11:54 AM By: UK Contractor Accountant Member since: Sep 18, 2013
    #13
  14. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    It's not my entire focus. We have your traditional Accountancy Practice as well running alongside.

    Still have some Contractor Ltd''s that are operating within IR35 but choose to continue with their company so they can route through some extra work through that's outside IR35.
     
    Posted: Sep 15, 2018 at 5:56 PM By: UK Contractor Accountant Member since: Sep 18, 2013
    #14
  15. SteLacca

    SteLacca UKBF Enthusiast Free Member

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    I wasn't being critical, and I'm sure you have a contingency. I was highlighting more that there's a large sector built around the contractor industry that could suddenly find themselves obsolete.
     
    Posted: Sep 16, 2018 at 2:35 PM By: SteLacca Member since: Jun 16, 2016
    #15
  16. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    I haven't read all the replies so apologies if I am repeating something but your DLA repayment will pay for the cost of Liquidation so best to speak to an Insolvency practitioner to decide whether you want to liquidate through Court known as a Compulsory Liquidation, or voluntarily known as a Creditors Voluntary Liquidation (CVL)
     
    Posted: Sep 17, 2018 at 9:25 AM By: Lisa Thomas Member since: Apr 20, 2015
    #16