Depressed. Your help please!!

[SamNeedsHelp]

Hi all good people over here,
I've setup a IT company in beginning of 2014 and am director of it. Only started trading in June 2014. As with all aspiring businesses I planned a lot, hired an accountant etc.

Things went fine for 9 months and then due market and personal situations I stopped trading. I have a family and a small baby and started taking more than my scheduled dividend eating into money saved for CT and VAT. Which is around £ 18K. I stopped working from past 6 months and being non British citizen I could not afford rent so immediately moved back to my country.

I have instructed my accountant to submit all the docs properly but I am afraid I have no money left to pay for CT and VAT.

I am really worried what will happen to me and my family. Will the HMRC come to my country (Malaysia) and arrest me? Will they take my property of my ancestors. I am not British and I have no property in UK and a small house here in Malasia

 

[Ian J]

Will the HMRC come to my country (Malaysia) and arrest me? Will they take my property of my ancestors. I am not British and I have no property in UK and a small house here in Malasia

The short answer is "no"

I'll let someone else give you the long answer

 

[Newchodge]

Please stop worrying. They will not pursue you to Malaysia. Your property there is safe.

 

[SamNeedsHelp]

I have to submit all the accounts and set it to not trading and dissolve it. I don't have any money left in that account to pay for accountant to do these things. If I can't afford that and leave things as is what will happen. Due to personal situation here I may not be returning to UK. Does that count as criminal behaviour and will the hmrc start criminal proceedings against me in Malaysia from UK.

Can someone please advise what my best next steps would be considering my situation ( which I shouldn't have been in first place but just learning life is stranger than you think). Please help

 

[Newchodge]

It is not a criminal matter.

It is the company, not you personally, that needs to submit accounts etc. if there is no money for the company to pay an accountant, then no accounts can be produced.

After the company has not traded for 3 months you can apply for it to be dissolved. You need to send a copy of the application to every person/organisation that is owed money. It is not a big deal.

 

[Lisa Thomas]

Hi You would only be at risk if HMRC decided to liquidate the Company. The Liquidator could potentially look to you to repay any illegal dividends drawn. If you go down the dissolution route you will give HMRC notice of the dissolution and they can object to it at that stage if they want to in order to appoint a Liquidator.

 

[Newchodge]

Hi You would only be at risk if HMRC decided to liquidate the Company. The Liquidator could potentially look to you to repay any illegal dividends drawn. If you go down the dissolution route you will give HMRC notice of the dissolution and they can object to it at that stage if they want to in order to appoint a Liquidator.

While this is true, the Liquidator is unlikely to try to take a civil case for debt in Malaysia.

And the matter is still not a criminal case.

 

[Chris Ashdown]

I would suggest you find the Spongbob letter on this forum and send that out to anyone you owe any money to and also to HMRC, state you have moved out of the country and leave it like that

 

[SamNeedsHelp]

Hi all thanks for the replies but I'm confused and more scared.

While this is true, the Liquidator is unlikely to try to take a civil case for debt in Malaysia.

And the matter is still not a criminal case.

So hmrc can stop/litigate if I try myself to dissolve the company and if I don't do it myself there is a chance still the can ask a liquidator to "look" for me to pay back the money.

@Newchodge You're saying it is unlikely but they may still file a case against me in Malaysia? And even in worst case scenario it still wouldn't be a criminal case?

As I live outside UK how can I communicate with hmrc via email? Is that a valid communication to send @Spongebob letter as an email?

It seems I just have to keep quiet and pray they won't come looking for me. And if they do, don't know what to do. Oh gosh! Pity me.

 

[Newchodge]

UK debt is NEVER a criminal matter. The Liquidator may sue you for return of money that you spent that belonged to the company, but the chances of this happening, if you were easy to get hold of and in the UK, for £18,000 would be less than 0.01%. Stop worrying.

You can either send HMRC the letter by post, which may be better as it will be postmarked Malaysia, or by email. Either way does not matter a lot really.

 

[SamNeedsHelp]

After a long gap I spoke to my accountant and he hasn't submitted my Year end accounts for Dec '14 due in September 2015 as he requires my signature. This will be my first time CT filing as the company was setup in Dec '13 (but I only started trading from July '14).

As so far only VAT filings are done and I'm not trading since past five months and given no CT filings yet (due Sept '15) is it good case for SpongeBob strategy. Should I go ahead and file for DS01 without submitting CT. Or would it backfire as Companies House might say my filings are overdue and can't dissolve, and HMRC will start liquidation.

Also my accountant was running my payslips though I'm not trading. Does running payslips count as trading?

Please advise for my best course of action. Should I first file CT returns and then apply for strike of or straightaway go with @Spongebob plan.

 

[UK Contractor Accountant]

You can not apply for strike off via the DS01 route as the company has assets in the form of your overdrawn Directors Loan Account.

You either have to wait for Companies House to automatically dissolve the company through non filing of documents or HMRC will start their own action to liquidate the company.

 

[StevensOnln1]

You can not apply for strike off via the DS01 route as the company has assets in the form of your overdrawn Directors Loan Account.

Yes you can. It doesn't say anywhere on the DS01 that you cannot apply for strike off if the company has assets.

 

[SamNeedsHelp]

If I can apply for DS01 would that be best step to take. Can you please answer my earlier post.

After a long gap I spoke to my accountant and he hasn't submitted my Year end accounts for Dec '14 due in September 2015 as he requires my signature. This will be my first time CT filing as the company was setup in Dec '13 (but I only started trading from July '14).

As so far only VAT filings are done and I'm not trading since past five months and given no CT filings yet (due Sept '15) is it good case for SpongeBob strategy. Should I go ahead and file for DS01 without submitting CT. Or would it backfire as Companies House might say my filings are overdue and can't dissolve, and HMRC will start liquidation.

Also my accountant was running my payslips though I'm not trading. Does running payslips count as trading?

 

[Scalloway]

Trading means actually doing work for the company with a view to getting income. If nothing was happening apart from payslips being issued I wouldn't consider that trading.

 

[UK Contractor Accountant]

The DS01 route is for solvent companies-it is clear from the OP's posts that the company has assets as well as liabilities and is probably insolvent.

http://m.accountingweb.co.uk/article/striking-company-get-details-right/521385

 

[UK Contractor Accountant]

http://www.rossmartin.co.uk/companies/ceasing-trading/112-striking-off-a-company

 

[Dave the rave]

The DS01 route is for solvent companies-it is clear from the OP's posts that the company has assets as well as liabilities and is probably insolvent.

http://m.accountingweb.co.uk/article/striking-company-get-details-right/521385

http://www.rossmartin.co.uk/companies/ceasing-trading/112-striking-off-a-company

Does that mean the spongebob plan is flawed ?

 

[UK Contractor Accountant]

No not really - do not need to submit DS01.

Refer to my earlier post above.

 

[kulture]

The DS01 route is for solvent companies-it is clear from the OP's posts that the company has assets as well as liabilities and is probably insolvent.

http://m.accountingweb.co.uk/article/striking-company-get-details-right/521385

I don't agree. That url simply says that the DS01 route cannot be used if someone has "commenced insolvency proceedings". Nowhere does it say the company has to be solvent.

Indeed many people have reported on this forum about using the DS01 route when the company is insolvent and has no realizable assets.

Now I know a director's loan is an asset, and if HMRC object to a DS01 then the could look into the matter and they could start a process to get the money from the director. BUT in many cases they do not go that far. So by going the DS01 route at best all ends well, and at worse the OP is no worse off than now.

 

[UK Contractor Accountant]

I don't agree. That url simply says that the DS01 route cannot be used if someone has "commenced insolvency proceedings".

No it doesn't it says ' Minute that the company had paid or will pay or all its outstanding debts and obligations,

You have also ignored what it says on the other link. There are many more I can post up to prove the point.'

 

[UK Contractor Accountant]

http://www.informdirect.co.uk/business-management/strike-off-company-with-ds01-form/

 

[SamNeedsHelp]

Just another point regarding the assets of the company. As I haven't submitted the Year End details how does anyone know about the assets or Directors loan. Isn't that one of the main points of @Spongebob plan.

If I go ahead with DS01 then to oppose it anyone have to guess about the assets of the company. I may be wrong about this, please correct.

@kulture As you say HMRC might start process to get money personally from director, I have left UK and won't be able to return, should I be worried they would come to my country and claim for my immovable property here. Please comment. @Scalloway @Newchodge

 

[UK Contractor Accountant]

You have 2 options - cover up, concealment; and economic with the truth about the assets of the company & then wait for Companies House to dissolve the company or hmrc to wind it up

Or send to Liquidator to wind up & negotiate the repayment of your DLA.

Nobody on the forum can tell you which way to go. You make the decision based on what your conscious tells you and what your are comfortable with.

Anyway what does your Accountant say about the situation?

 

[StevensOnln1]

HMRC are not going to persure you to the other side of the world for £18,000. Just send the DS01 and forget about it.

 

[kulture]

No it doesn't it says ' Minute that the company had paid or will pay or all its outstanding debts and obligations,

You have also ignored what it says on the other link. There are many more I can post up to prove the point.'

I do not see that text in your url. It does not really matter anyway. There is little point looking at interpretations where the details are clear in the act itself.

The DS01 form includes the following "declare that none of the circumstances described in section 1004 or 1005 of the Companies Act 2006.....exists" and these sections say that the company cannot be trading for the last 3 months and must not be subject to a winding up order or has agreed a voluntary arrangement under the insolvency act, and a few other obvious clauses. NONE of these clauses prohibit sending in a DS01 when the company is insolvent.

So this is the legislation itself. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/429544/DS01_V7.0.pdf and http://www.legislation.gov.uk/ukpga/2006/46/section/1003 together with the next two sections.

 

[Lisa Thomas]

Hi. The only way you can get 100% comfort on your DLA position would be to instruct an IP to help Liquidate the Company for you and reach an agreement with them regarding a repayment/settlement plan. The alternative is to go down the DS01 route and keep your fingers crossed that a) it goes through and the Co is not reinstated in the next 20 years (which is highly unlikely) or b) HMRC does not object and Liquidate the Company.

 

[Newchodge]

Hi. The only way you can get 100% comfort on your DLA position would be to instruct an IP to help Liquidate the Company for you and reach an agreement with them regarding a repayment/settlement plan. The alternative is to go down the DS01 route and keep your fingers crossed that a) it goes through and the Co is not reinstated in the next 20 years (which is highly unlikely) or b) HMRC does not object and Liquidate the Company.

In the unlikely event that either happen, who is going to chase the OP in Malaysia for a potential debt of £18,000?

How can the company instruct an IP when it has no finds to pay one?

 

[UK Contractor Accountant]

The IP's fees are paid out of the DLA repayments.

The Director negotiates a deal with the IP based on affordability which may or may not include a write off on some of the debt.

 

[UK Contractor Accountant]

If you submit the DS01 you have to send a copy to HMRC anyway. They automatically send in an objection if there is outstanding Tax Returns & Accounts.

So pretty pointless sending off in my opinion

 

[StevensOnln1]

If HMRC object, simply wait 3 months and send another DS01. Companies House will not tolerate repeated objections if the objector does not take any further action to wind up the company. Not that it matters anyway since the OP is the other side of the world, but if they want to put the company to bed sending a DS01 will get things moving sooner than doing nothing.

 

[UK Contractor Accountant]

HMRC have their own Insolvency & Debt Department and will routinely object until at least past the filing deadline date for the Return which will be 12 months from the year end.

That's why it is pretty pointless submitting the DS01. The SB plan even states that it is not really necessary to submit the Strike Off form.

 

[kulture]

It does not matter if HMRC object. As you say they always object. All this does is delay the process. Eventually either HMRC actually start to wind the company up, or Companies House will ignore the objection and the company ceases. So its worth putting in the DS01 and repeating until the company goes away.

 

[Lisa Thomas]

The IP's fees are paid out of the DLA repayments.

The Director negotiates a deal with the IP based on affordability which may or may not include a write off on some of the debt.

...What he said!

 

[Paul_Walters]

OP, send in the DS01 and be done with it. It will be fine. If they object, wait 3 months and repeat. Keep doing this until CH get fed up and strike it anyway. There is not a cat in hells chance that anyone is going to chase you halfway around the world to chase a potential debt when you probably don't even have the money to pay it. It would simply cost more than they would ever get back.

Good luck.