Dissolving Ltd. company with debts owed to HMRC

[Dom Mowbray]

Hi,

I have a been a product photographer for over 20 years trading for almost all of that as a sole trader. Four years ago I was advised by my accountant to change to being a Ltd. company, making myself and my wife directors, due to paying less tax than being a sole trader (dividends etc.). The last five years have not been easy as I have seen my industry flooded with people trying to make a living out of being a photographer. Plus the fact that mobile phones and Apps have become so good the requirements for pro photographers is becoming less and less. In short, I am working less than I was and being paid a lot less money for the work that I do

Almost every year when I first started as a photographer I got 1 or 2 jobs a year that generated a large portion of my annual income and I tended to use this income to pay off the debt accumulated over the year such as tax. Sadly those big juicy jobs seemed to have dried up and have resulted in me not paying off the full CT for the last couple of financial years.

I have been hoping that business might pick up or another one of those rare big earners appears which I would use to clear a large part of mt CT. I am now at the point where I feel there is no point continuing as a Ltd. company and maybe I should look at getting employment in some other industry.

I owe HMRC in CT about 18k as non-payments from the last 2/3 years.

There are no assets in the company - Well not much apart from my equipment (which is now old so not worth much at all).

My accountant won't file my accounts due at the end of this month (companies House) as I owe them £800.00.

Can I dissolve the company with debts? I cannot really see a way that I can pay off the 18K that I owe so what can I do?

Should I apply to have the company struck off or will this will be opposed by HMRC? What happens then?

Are we going to lose our home and everything? I have 3 kids and I am yet to tell my wife the full extent of what I owe to HMRC. I am so stressed out at the moment finding it impossible to go to sleep, waking in the middle of the night and not being able to sleep only then to wake and the first thing on my mind is this debt that I have no idea how to clear.

Any advice would be greatly appreciated as I feel like I am close to the cliff edge and don't want to see my family life affected by my shortcomings in my business life.

 

[Mr D]

Yes you can dissolve with debts.

Check out the spongebob plan near the top of the insolvency forum. HMRC will object - let them. Company still needs to dissolve.

The debts of the business belong to the business. You do not owe them, the business does.
Your home is safe so long as the debts remain with the business. Usually fraud etc to lose the protection you currently have.

Now get some sleep.

 

[Dom Mowbray]

Thanks, Mr D. I'll take a look at the Spongebob plan. Not sure I'll be getting good sleep any time soon though!!

 

[Mr D]

Thanks, Mr D. I'll take a look at the Spongebob plan. Not sure I'll be getting good sleep any time soon though!!

Its not the easy way, its not without issues - creditors still chase payment.
However it is simple. A number of us have been there and done that.

 

[KAC]

Fortunately, from your point of view, your accounts only show debtors and don't differentiate between a director's loan balance (i.e. any amount you owe the company) and other debtors so HMRC may not object to the strike off.

 

[Dom Mowbray]

Hi, Its been a couple of months since I have made my post and If at all possible some more advice would be greatly appreciated.

I have ceased trading (I have received some payments from old outstanding invoices, but effectively the company is dormant) but I have now received a letter from Companies House that the company will be struck off in two months time (section 1000). As I still owe a substantial amount of money to HMRC in CT so what shall I do? Let Companies House dissolve the company? Surely HMRC will be notified and will stop that from happening? If so then what will happen and what can I do? Should I try and speed up the process and speak to Companies House and put the company into voluntary liquidation (almost no assets <£5K)? Will HMRC issue a County Court summons against the company? If so what do I do then?

Still trying to figure out how I got myself into this terrible mess with such a large amount of CT unpaid.

Any advice would be amazing and hopefully, some might be better news than I expect.

Thanks

 

[SteveHa]

Much as I hate to say it, let it die. The Companies House letter is no doubt because of a failure to file the confirmation statement. In such circumstances, there are no London Gazette notices, and so it is likely that no one will even be aware it's going to be struck off.

Creditors will still chase, but once the company is struck off, you can simply tell them that. There's nothing that they can do to you.

 

[Dom Mowbray]

Thanks for the advice. Surely HMRC will try and stop the company from being struck off?

 

[SteveHa]

If it's Companies House doing it because the confirmation statement hasn't been filed then HMRC will probably not even know until it's done.

 

[Mr D]

Thanks for the advice. Surely HMRC will try and stop the company from being struck off?

If they should try, what then? The company will still be eventually dissolved.

 

[Dom Mowbray]

Hi All,

Back in April, I posted a thread asking advice about my company and its debts to HMRC. I owe HMRC in CT about 18k as non-payments from the last 2/3 years. My company has now been struck off/dissolved. I did receive a letter from companies house with an objection, but that was withdrawn. My business bank account has been closed/frozen and all the remaining funds have been seized by the treasury.

May I ask for anyone's advice on two points?

1. What will happen to the HMRC debts? Am I still liable to pay these?
2. What will happen to the remaining funds in my business account (circa £1K) which has ceased by the treasury?

Genuinely been the most stressful 12 months and continues to be so.

Thanks in advance for any advice given.

 

[Gavin Bates]

Hi

Now that the Company has been struck off the debts die with the Company. Also the cash at bank is in effect property of the treasury.

Regards

Gavin

 

[Dom Mowbray]

Hi

Now that the Company has been struck off the debts die with the Company. Also the cash at bank is in effect property of the treasury.

Regards

Gavin

Hi Gavin,

Thanks for the encouraging info. Seems all too good to be true. Will HMRC not pursue me even though the company has been dissolved? If they do get in touch what do I do? Ignore or tell them it is no longer an issue with me as the company is no longer trading?

So I have lost any money in my bank account. I assume that will go towards any money owed to HMRC?

Regards

 

[SteveHa]

The tax debt died with the company. It simply will never be settled.

The money in the bank account will go the treasury. You can view it as being paid towards the CT if you want, though the reality is it isn't.

 

[Gavin Bates]

Hi

The debt is a Company debt and not yours. Yes as you may have seen on other posts if HMRC liquidated the Company then there would be a potential of illegal dividends or similar but as it stands the Company no longer exists.

If HMRC gets in touch the Company has ceased to trade and has now been struck off.

Finally, the bank account monies will go to the government at some stage but a different department.

Regards

Gavin

 

[Dom Mowbray]

Hi

The debt is a Company debt and not yours. Yes as you may have seen on other posts if HMRC liquidated the Company then there would be a potential of illegal dividends or similar but as it stands the Company no longer exists.

If HMRC gets in touch the Company has ceased to trade and has now been struck off.

Finally, the bank account monies will go to the government at some stage but a different department.

Regards

Gavin

Hi Gavin,

Thanks so much for the advice.

If I do receive any correspondence from HMRC then I will reply using the words 'the Company has ceased to trade and has now been struck off'.

I assume there is no point trying to retrieve the £1k using a solicitor? Or should I just walk away and just be happy that this whole messy incident is now behind me and I can now move forward?

 

[Gavin Bates]

Hi

Yes, that is the way to reply.

You can only claim the bank account monies by putting the Company back on the register, which will a) be costly (and more than the amount in the account) and b) allow HMRC to go for a compulsory liquidation if they wish. It would also seem to be the opposite of what you want?

Regards

Gavin

 

[Dom Mowbray]

Hi

Yes, that is the way to reply.

You can only claim the bank account monies by putting the Company back on the register, which will a) be costly (and more than the amount in the account) and b) allow HMRC to go for a compulsory liquidation if they wish. It would also seem to be the opposite of what you want?

Regards

Gavin

Hi Gavin,

Again thanks for the advice.

Does this now mean I am no longer able to be a director of a Ltd. company?

Also, it looks as if my voluntary dissolution was on paper not done. And actually done by companies House themselves (I assume for non-filing of companies accounts). Does this make any difference to the end result?

 

[Scalloway]

Does this now mean I am no longer able to be a director of a Ltd. company?

It has no effect on your ability to be a company director in the future.

Does this make any difference to the end result?

No.

 

[Mr D]

Hi Gavin,

Again thanks for the advice.

Does this now mean I am no longer able to be a director of a Ltd. company?

Also, it looks as if my voluntary dissolution was on paper not done. And actually done by companies House themselves (I assume for non-filing of companies accounts). Does this make any difference to the end result?

Dissolving a company or even multiple companies does not stop you bring a director. Just needs to be a new company.
Been there done that. Makes no difference overall.

Would have been easier taking the money out of account before it was frozen. Now it belongs to the crown as asset of a dissolved company.

Think someone looked into recovering a sum of money last year from his company wrongly shut down, think the cost he came across was more than double the amount you had left.

 

[Dom Mowbray]

Hi All,

Firstly thank you, everyone, who has given invaluable advice.

I have received a letter fom my accountants with an invoice of some unpaid bills. Circa £800. As it's addressed to my dissolved company do I have to pay it? Should I have informed the company that I was dissolving the company?

Thanks in advance.

 

[Mr D]

Hi All,

Firstly thank you, everyone, who has given invaluable advice.

I have received a letter fom my accountants with an invoice of some unpaid bills. Circa £800. As it's addressed to my dissolved company do I have to pay it? Should I have informed the company that I was dissolving the company?

Thanks in advance.

No you do not pay it and yes supposed to send all creditors a copy of DS01 you use to close company. That's of course if you know they are creditors...
I had that with a few companies while I was trading with my old company - out of the blue get sent an unpaid invoice was unaware of that was a year old.
Still get it now 2 years after dissolving from Amazon chasing payment.

 

[KAC]

For £800 there is little that the accountants can do. If the invoices predate the dissolution, you should have advised them by sending a copy of DS101. They could have objected to the striking off and taken action at that time to collect the debt. The debt has now died with the company unless you signed a personal guarantee.

 

[Lisa Thomas]

Did you give a PG to the accountants as this is quite common as part of their T&Cs?