Final returns - sponge bob

Discussion in 'Insolvency' started by Its4john, Jun 20, 2020.

  1. Its4john

    Its4john UKBF Regular Free Member

    142 11
    Does a company need to submit final tax and vat returns when using the spongebob plan?

    asking for a friend :)
     
    Posted: Jun 20, 2020 By: Its4john Member since: Nov 10, 2017
    #1
  2. JEREMY HAWKE

    JEREMY HAWKE UKBF Legend Full Member

    5,035 1,682
    That depends as the plan is for those that have no hope what so ever and if a considerable amount is owed to the revenue It would be advisable to get the IPs in and there are good IPs on this site !
     
    Posted: Jun 20, 2020 By: JEREMY HAWKE Member since: Mar 4, 2008
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  3. Its4john

    Its4john UKBF Regular Free Member

    142 11
    ?? The question doesn't depend on anything. The spongebob plan is going ahead.

    The question is :

    Does a company need to submit final tax and vat returns when using the spongebob plan?
     
    Posted: Jun 20, 2020 By: Its4john Member since: Nov 10, 2017
    #3
  4. Mr D

    Mr D UKBF Legend Free Member

    22,971 2,767
    Short answer appears to be no.
     
    Posted: Jun 20, 2020 By: Mr D Member since: Feb 12, 2017
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  5. JEREMY HAWKE

    JEREMY HAWKE UKBF Legend Full Member

    5,035 1,682
    Agree with Mr D No !

    But where did that money go has our director here taken too much out ?

    Could HMRC make the director personally liable if this money has been taken in dividends
    While I think the plan is good for those with genuine problems I think some people just assume that the word spongebob is some magic formula

    To comment we really need to understand some of the circumstances
     
    Posted: Jun 20, 2020 By: JEREMY HAWKE Member since: Mar 4, 2008
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  6. Its4john

    Its4john UKBF Regular Free Member

    142 11
    What money? Director has taken nothing in dividends or salaries. DLA is not overdrawn, this is a simple case of a business which has failed. Why do circumstances need to be understood for a simple question?

    Thank you @Mr D for your answer.

    Would anyone else like to answer this simple question without needing irrelevant analysis?
     
    Posted: Jun 20, 2020 By: Its4john Member since: Nov 10, 2017
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  7. JEREMY HAWKE

    JEREMY HAWKE UKBF Legend Full Member

    5,035 1,682
    I understand Bob's plan
    I did not ask this question to look clever
    We need to understand the situation with the company accounts to answer yes or no
    If it was a simple yes or no you would not have a business forum

    If the company is not owed money from the director then no
     
    Posted: Jun 21, 2020 By: JEREMY HAWKE Member since: Mar 4, 2008
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  8. Scalloway

    Scalloway UKBF Legend Free Member

    16,184 3,420
    HMRC will object if the returns are overdue. If they are submitted and show HMRC are due money then they will object.

    But submitting them is not essential as Companies House will allow strike off to go ahead eventually unless HMRC appoint a liquidator.
     
    Posted: Jun 21, 2020 By: Scalloway Member since: Jun 6, 2010
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  9. Adam93

    Adam93 UKBF Regular Free Member

    364 76
    If you don’t file them, it will drag the whole process out. If you do file them, it will be a quicker process.

    if a genuine failed business, there is probably no tax to pay anyway so why wouldn't you file?

    if you want meaningful advice, more information needs to be provided. At the moment you are only getting generic advice which may or may not be applicable to you.
     
    Posted: Jun 21, 2020 By: Adam93 Member since: Jan 18, 2018
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  10. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,597 2,412
    If you provide final accounts and have nothing to hide then presumably it shows HMRC good intent and gives them the information to either let companies house go ahead or not

    Using the same logic not forwarding them in whatever state may make them keep objecting and drag things out for quite a long time

    If you have a large DLA then it may not be a good idea to tell the world especially HMRC

    Worth talking to a few IP's to see the cost and what they would agree to, less stress and more likely a clean cut
     
    Posted: Jun 21, 2020 By: Chris Ashdown Member since: Dec 7, 2003
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  11. Mr D

    Mr D UKBF Legend Free Member

    22,971 2,767
    Its spongebob - the end result is company dissolved. We don't need more information - either a creditor winds the company up or companies house allows it to be dissolved. Are there any other options?
     
    Posted: Jun 21, 2020 By: Mr D Member since: Feb 12, 2017
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  12. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,523 448
    HMRC will object unless final returns are filed. Sometimes they will also Liquidate.

    But if statutory docs. are not filed with Companies house they will strike it off in due course anyway.
     
    Posted: Jun 22, 2020 By: Lisa Thomas Member since: Apr 20, 2015
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  13. Spongebob

    Spongebob UKBF Ace Free Member

    2,213 1,118
    Simple answer - No!

    There are two possible outcomes of the Spongebob Plan.

    1. Companies House dissolves the company without a liquidator getting involved.

    2. A creditor (normally HMRC) winds the company up leading to a compulsory liquidation.

    The non-submission of tax or VAT returns has no impact on the outcome.
     
    Posted: Jun 24, 2020 By: Spongebob Member since: Dec 9, 2008
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  14. JEREMY HAWKE

    JEREMY HAWKE UKBF Legend Full Member

    5,035 1,682
    You or nobody else to my knowledge has ever explained what happens if HMRC suspect that the director may have taken money out .

    I dont believe even after all this time studying the plan that CH will just close it down when they get fed up and HMRC wont challenge with out the knowledge of the companies financial status .

    If a director has done nothing wrong and genuinely does not owe the company money then they should use the plan but it is widely assumed on here that they will not be challenged

    All who wish to partake in the use of this plan should be aware that HMRC will investigate and that the plan should only be used if your company is a genuine case

    Those of us that are regular members of UKBF also have an unwritten loyalty to other forum members IE The IPs ! :confused::confused:

    Why would we assist a new member to close their company using the plan and indirectly starve our fellow members (Insolvency practitioners) of business .
     
    Posted: Jun 27, 2020 By: JEREMY HAWKE Member since: Mar 4, 2008
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  15. Mr D

    Mr D UKBF Legend Free Member

    22,971 2,767
    Because we aren't going to suggest what is a non viable solution?

    Great if an IP can be afforded. What if an IP cannot be afforded? Will sending the business to one of our resident IPs (who I have great respect for) benefit them? More importantly, what solution is the best for someone who has no assets, no money and has just lost their job?
     
    Posted: Jun 27, 2020 By: Mr D Member since: Feb 12, 2017
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  16. Red Wood

    Red Wood UKBF Regular Free Member

    448 49
    @Mr D is insolvency to be declared when you can't pay some of your creditors or do you wait until you can't pay ANY of your creditors. Genuinely curious.

    I do struggle to understand how IPs seem to make money from broke businesses. The recent receivership of that large retail giant as an example. How is it possible KPMG are appointed and indeed probably set to make vast sums of money if debt is all that is left, how are they paid?

    hope that doesn't sound like a daft question?
     
    Posted: Jun 27, 2020 By: Red Wood Member since: Jan 14, 2014
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  17. Mr D

    Mr D UKBF Legend Free Member

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    Often a business has assets. Large retail giant for example may have millions in stock that was for sale.
    In the priority of payment for debts the IP takes their cut first. If there is anything left - and there often is in my experience as a creditor - then others get some money.
    Wonga ended up paying out 4 point odd percent for example to its unsecured creditors.

    Realistically if you cannot pay creditors when payment comes due then cannot pay any in full. Insolvent, get advice, any payments for creditors should then be pro rata. Much to the annoyance of every creditor who would prefer to be paid in full!

    I got told I could pay the IP privately out of my own funds. Tad problematic when just lost your job...though I gather some high paid directors can use redundancy money to do that. If they use an IP.
     
    Posted: Jun 27, 2020 By: Mr D Member since: Feb 12, 2017
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  18. Red Wood

    Red Wood UKBF Regular Free Member

    448 49
    thanks for the detailed response.

    Fully understand then assets part. Does an IPs cut even come before those with charges against assets?

    It seems like an almost unbelievable process in which a new party becomes involved with a failing business to jump Infront of the queue for monies owed and have a legal right to get at it first.

    Im guessing majority of cases there isn't too much to spread about after the ips fees and other secured creditors. We've never had a big customer go pop but we have had a few medium sized debtors go and Its incredible when we get the full list of creditors and what was owed to everyone. How can directors make decisions that put companies in a position where they so reliant on one major customer paying they end up screwing over the whole list of creditors.
     
    Posted: Jun 27, 2020 By: Red Wood Member since: Jan 14, 2014
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  19. Red Wood

    Red Wood UKBF Regular Free Member

    448 49
    Re: your last statement. Why would any director agree to pay IP fees out of their own pocket, surely that can't be enforced due to the umbrella protection of limited liability. There is no guarantor provided to the IP as there maybe to a biz overdraft for example?
     
    Posted: Jun 27, 2020 By: Red Wood Member since: Jan 14, 2014
    #19
  20. Mr D

    Mr D UKBF Legend Free Member

    22,971 2,767

    Some presumably do pay. Hence it's an option.
     
    Posted: Jun 28, 2020 By: Mr D Member since: Feb 12, 2017
    #20