help with VAT debt please

[Jamesy123]

Hello everyone,

I'm new to the forum and would appreciate some help.

I was in a partnership with one other partner until July 2011. Business for the last few years was poor and I didn't have a good working relationship with my partner so told him that we should split.

We agreed that I would leave the business and he would retain all stock and creditors - with the exception of the approx £20k we owed for VAT(including interest and charges which make up nearly half of this), which we would split.

Our last nine vat returns had not been submitted - these have been recently submitted, and now we have received notification of a VAT inspection.

I have since started a new business which is doing reasonably well.

HMRC are (according to my accountant) refusing to split the liability.

Question 1 - Have any of you ever heard of a case like this where HMRC would split the bill?
My fear is that if I pay my half but my ex-partner doesn't (as I know he can't)
then I will have to pay his half also.

Question 2 - Assuming the answer to Q1 is no chance, how likely is it that HMRC will bankrupt both me and my ex-partner?

Thanks in advance

 

[Scalloway]

HMRC are (according to my accountant) refusing to split the liability.

Question 1 - Have any of you ever heard of a case like this where HMRC would split the bill?
My fear is that if I pay my half but my ex-partner doesn't (as I know he can't) then I will have to pay his half also.

This is called joint and several liability. Any partner can be pursued for all the debts of a partnership. It is then up to the one who pays to collect the other partners' share.

 

[MyAccountantOnline]

Question 1 - Have any of you ever heard of a case like this where HMRC would split the bill?

No

Question 2 - Assuming the answer to Q1 is no chance, how likely is it that HMRC will bankrupt both me and my ex-partner?

They will certainly seek to recover the VAT from you - my advice is to start talking with them (with your accountants help) asap it wont go away.

 

[Charles Accountancy]

When is the VAT inspection?

 

[Jamesy123]

Hi,

Thank you for your replies.

The vat inspection was today!

 

[Charles Accountancy]

Did you discuss the above the HMRC VAT inspector? What was his view?

 

[Jamesy123]

He says that the debt collection people will try to force us to repay the debt within 3 months but if we try hard we may be able to extend that to 18 months.
After what I have been told here and by my accountant, HMRC will definitely not split the liability between me and my ex-partner - I didn't want to discuss this with the inspector or the possibility of one partner not being able to keep up payments as my thinking was if they think this was the case then they mightn't agree to a TTP arrangement.
Apparently HMRC no longer agree to face to face talks to discuss repayment of the debt so the VAT inspector from today has to contact them to discuss his findings, then they contact us

 

[business123]

You said earlier that you left the business in July 2011, so why did you meet the VAT inspector today?

With regards to the debt, can you afford to repay the full amount over the 18 months, if HMRC allow this timeframe? You need to expect to repay the full debt yourself if you can't guarantee that your ex-partner will pay his share.

Do you have assets personally i.e. house, car etc?

 

[Bob]

With a debt of £20K, it is quite possible that HMRC may commence insolvency proceedings to collect the amount due and that could potentially lead to bankruptcy. At the moment, you should discuss with your accountant what you can do to protect your new business in the event that you were to be made bankrupt. Good luck but it does go to show how important it is to keep your VAT returns up to date

 

[Jamesy123]

You said earlier that you left the business in July 2011, so why did you meet the VAT inspector today?

With regards to the debt, can you afford to repay the full amount over the 18 months, if HMRC allow this timeframe? You need to expect to repay the full debt yourself if you can't guarantee that your ex-partner will pay his share.

Do you have assets personally i.e. house, car etc?

All the missing vat returns were submitted recently which triggered the vat inspection.

It would be difficult for me to repay the whole debt in 18 months. Still in my 1st year of the new business so can't say for sure.
I have no personal assets - rented house and a 10 year old car.

With a debt of £20K, it is quite possible that HMRC may commence insolvency proceedings to collect the amount due and that could potentially lead to bankruptcy. At the moment, you should discuss with your accountant what you can do to protect your new business in the event that you were to be made bankrupt. Good luck but it does go to show how important it is to keep your VAT returns up to date

I have personal credit card debts of over £30k which are about 10 years old - minimum payments each month of £1000 of which about £700 is interest - I reckon I've paid them back many times over - Maybe bankruptcy would be a good option for me anyway?