Director Self Assessment & Company dissolved

Discussion in 'Insolvency' started by NEWUSERUK, Nov 22, 2017.

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  1. NEWUSERUK

    NEWUSERUK UKBF Newcomer Free Member

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    Hi all,
    I am seeking urgent advice with regard a very difficult situation and I've been given very different advice by debt consultants, and I'm completely confused.
    I worked as a freelancer and set up a limited company. However, I have no excuse other than I'm bad with paperwork and did not face up to my responsibilities as the director. No tax return or accounts were ever filed during the company existence (2 years).

    The company has been dissolved by HMRC early this year. This week, I decided to start clearing all my personal debts, tax debts, and I'm finally dealing with the HMRC letters.
    HMRC is demanding that I file a self assessment on my taxes during the 2-year period as the company's director (along with a hefty penalty fee for overdue self-assessment - fair enough).

    The issue is that I paid myself monthly, which I need to declare now. But I don't know how to declare my wages, and file the self- assessment forms without opening a can of worms. My company was dissolved with no assets to liquidate, and I never filed a tax return or accounts.

    Should I consider the money that I paid myself as wages, payment dividends or overdrawn DLA. How should I address this for purposes of self assessment? without the HMRC investigating my dissolved company and re-open to claim corporate tax?

    I paid myself irregular payments monthly (between £1k - £1.5k), and the total yearly was not over £12k first year, and £22k on the second year. How's the best way to declare?

    Many thanks.
     
    Posted: Nov 22, 2017 By: NEWUSERUK Member since: Nov 22, 2017
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  2. JohnMusik

    JohnMusik UKBF Contributor Free Member

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    Did HMRC contacted you about Self-Assessment or did you contact them first? Did you ask Companies house to dissolve your company or they did it on their own due to no returns filed?

    You are not personally liable for corporation tax or any other taxes or debts of your ltd company. However, if you had Director Loan Account overdrawn then they can chase you for that. I am sure someone experienced will help you on this. In meantime, please answer above questions.
     
    Posted: Nov 22, 2017 By: JohnMusik Member since: Nov 22, 2017
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  3. NEWUSERUK

    NEWUSERUK UKBF Newcomer Free Member

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    Hi JohnMusik,
    HMRC contacted me about Self-Assessment, and Companies House struck off my company due to no anual returns filed - yes.

    Should I consider the money that I paid myself as wages, payment dividends or overdrawn DLA? I never filed a Self-Assessment before, so unsure which one is correct category to declare.

    Thank you for your help.
     
    Posted: Nov 22, 2017 By: NEWUSERUK Member since: Nov 22, 2017
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  4. JohnMusik

    JohnMusik UKBF Contributor Free Member

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    As far as I know you cannot claim it as wages as company has to be PAYE registered and send details to HMRC every month you run your payroll. I think it will have to be dividends which will cover up to distributeable funds. Any remaining amount will be classed as DLA overdrawn.

    As you get 11500 tax free allowance so almost nothing tax due in year 1. For 2nd year, some tax will be due but will need to workout what proportion is DLA and what proportion is Dividend. But as amount is small so tax payble will not be much different (DLA write off or Dividends or combination).

    You don't pay tax on DLA until it is written off formally so I don;t think any need to declare it on Self-Assessment as it has not be written off. But double check with expert.

    I am not sure what steps HMRC will take about your closed comapny but looking at potential Tax due they are unlikely to touch it. This is just my assumption (based on other people experiences shared here) so do consult someone experienced on this forum.
     
    Posted: Nov 22, 2017 By: JohnMusik Member since: Nov 22, 2017
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  5. NEWUSERUK

    NEWUSERUK UKBF Newcomer Free Member

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    Thank you so much - that was very helpful
     
    Posted: Nov 22, 2017 By: NEWUSERUK Member since: Nov 22, 2017
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  6. Newchodge

    Newchodge UKBF Big Shot Free Member

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    While you were a director of the limited company, did HMRC ask you to submit self assessments?
     
    Posted: Nov 22, 2017 By: Newchodge Member since: Nov 8, 2012
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  7. NEWUSERUK

    NEWUSERUK UKBF Newcomer Free Member

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    yes - they did. But i didn't know. I got confused, and thought they were asking me to send a self-assessment as sole trader.
    Only now, when I called HMRC, I discovered that the letters were asking for Self-Assessment filing as Company director (not sole trader).
     
    Posted: Nov 22, 2017 By: NEWUSERUK Member since: Nov 22, 2017
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  8. SteveHa

    SteveHa UKBF Ace Free Member

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    You have an issue, and should probably speak to an advisor.

    The money withdrawn cannot be wages. I'll assume no PAYE scheme was set up and no RTI submissions were made. This leaves DLA or dividends.

    If DLA, and this has now been released or written off, this would represent income subject to income tax at the time of the release or write off, and of course national insurance. This would all fall into one year, potentially pushing you into (or further into) the higher rate band.

    So the only option is dividends. However, without documentation to support dividends, if HMRC were to open an enquiry they could counteract the treatment and treat as income instead. Income tax and NI is more than dividend tax would be and so you end up in the same position, potentially, as DLA (especially when you consider that interest and potential penalties will be charged).
     
    Posted: Nov 24, 2017 By: SteveHa Member since: Jun 16, 2016
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  9. NEWUSERUK

    NEWUSERUK UKBF Newcomer Free Member

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    Thank you for the advice! Appreciated.
     
    Posted: Nov 27, 2017 By: NEWUSERUK Member since: Nov 22, 2017
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