I can't pay my corporation tax bill

[bluespire]

Hello, hope somebody can help.

I have a £7k corporation tax bill due on 31st July 2010 for my Ltd company. I have paid £2k as that is what I had left in my business bank account. I therefore cannot pay the remainder and I have contact the HMRC Business support line and they will not help with a payment plan.

I have no assets as I'm just a consultancy based compnay.

The work dried up towards the end of 2009 and I was forced to take a permanent job in March 2010 after eating into my corporation tax provision.

Can anybody advise what my options are. I cannot afford to pay the tax bill personally. If I was to close the company down would the HMRC chase me for the money?

I do a little bit of work at weekends but not enough to cover a payment plan.

I cannot see any options but to close the business down but I'm unsure as to how I will be personally liable.

 

[Truemanbrown]

Call LDF Professionals on 01244 527300. They do loans to help you pay any tax laibilities.

 

[Williams lester]

Call LDF Professionals on 01244 527300. They do loans to help you pay any tax laibilities.

Why would you take a loan to pay corporation tax??

First thing to do is (assuming you are closing the company) to get accounts drawn up for the period. These should show a loss if there has been no work but you have still taken a salary and incurred expenses. This loss can be carried back to the period for which tax is owed to reduce the bill.

If there is still a deficit, let HMRC know the company has ceased trading and has no assets, and invite them to wind up the company.

 

[bluespire]

Thanks Williams Lester.

Will the HMRC come to me personally for the corporation tax liability? Will it affect my credit rating?

 

[KidsBeeHappy]

It's unusual of them not to take a payment plan. It may just be that you got the wrong person, or just someone that got out of bed the wrong side that day.

Try the number on this page; http://www.hmrc.gov.uk/pbr2008/business-payment.htm

 

[bluespire]

Thanks Sandiep.

That's the number I tried and had an unhelpful person.

 

[wizzard]

Try the number again, in any organisation you get someone who isn't quite up to scratch.

 

[MM Associates]

Ive had nothing but praise from clients who have rang the debt management department at HMRC to arrange a payment plan. I would give them another call and stress that you are not trying to get out of paying your CT just that you have cash flow problems meeting the liability.

Mark

 

[QuickHomeBuyers]

Call LDF Professionals on 01244 527300. They do loans to help you pay any tax laibilities.

And you are a chartered accountant? God (DOG) help your clients.

 

[KM-Tiger]

... trying to get out of paying your CT ...

But it's not his CT, it's the company's. The OP is not personally liable to pay it, so why make an arrangement for a debt that the OP is not liable for?

If the Ltd Co has effectively ceased trading then steps to wind it up should be taken. Williams Lester's advice above is spot on.

 

[bluespire]

Thank you all for your time and advice in replying to my query.

So am I correct in gathering from the posts above that if I let HMRC know the company has ceased trading and has no assets, and invite them to wind up the company they can not come to personally for the corporation tax debt? As the ltd company is seperate to myself?

If I was to reluctantly go down this route would this mean I could not be a director again?

 

[QuickHomeBuyers]

Thank you all for your time and advice in replying to my query.

So am I correct in gathering from the posts above that if I let HMRC know the company has ceased trading and has no assets, and invite them to wind up the company they can not come to personally for the corporation tax debt? As the ltd company is seperate to myself?

If I was to reluctantly go down this route would this mean I could not be a director again?

The only possible reason stopping you from being a director again is if they can prove that the company went under due to directors(your) fault. Which I think is quiet difficult as it is.

 

[KM-Tiger]

So am I correct in gathering from the posts above that if I let HMRC know the company has ceased trading and has no assets, and invite them to wind up the company they can not come to personally for the corporation tax debt? As the ltd company is seperate to myself?

If I was to reluctantly go down this route would this mean I could not be a director again?

Provided you have done nothing wrong, then nothing to stop you being a director again.

As already advised, you would do well to make sure the company's affairs are in order in terms of drawing up accounts.

Above all don't feel guilty. Business is risky. Sometimes that risk produces profit, other times losses and insolvency. None of us can know for certain at the outset which way it's going to go, or how it might turn out over time.

 

[bluespire]

When you say "providing you have done nothing wrong" what do you mean by something "wrong"?

 

[Williams lester]

Possibly fraudulent or insolvent trading.

 

[David Griffiths]

Nobody has asked the question about where the corporation tax money has gone.

If it's simply been taken from the company and spent (in other words without going through PAYE) then it seems to me that there is every possibility that either there has been an illegal dividend, which would be repayable to the company, or there is an overdrawn directors loan account, which would also be repayable to the company. That seems to be the situation in nearly all of these cases.

It's likely that nobody will ask any questions and that the director will get away with it. However, that doesn't mean that there's no possibiity of it being chased by a liquidator.

 

[PaulCCS]

I agree entirely with David.

 

[elaine@cheapaccounting]

and see this:

http://www.ukbusinessforums.co.uk/forums/showthread.php?t=166619

 

[Alan R Price]

Speaking as a licensed insolvency practitioner I agree with Williams Lester. If the company has outlived its purpose there is no point in trying to keep it alive. Do not use your own money to pay company debts - you have no obligation or duty to do so. Certainly do not borrow money to pay what is not your own debt: you are ring-fenced from the company's debts by limited liability - that's exactly what it's for.

If the CT debt is the only liability and the assets are minimal you could also consider having the company struck off - visit the Companies House website for information on this - the cost of striking-off is negligible.