Insolvency - HMRC and Barclaycard Commercial only

[Andrew Grant]

Hi all,

This is a fab site, I have spent a lot of time in the last couple of days reading through, it's a great resource.

Up until June 2014 I was the sole director of a Ltd company which I set up in 2011. In June I emigrated to the Middle East to take up a full time position. My main reason for doing this was for the pay increase, that way I could start to pay down my personal debt. I had a fair amount of credit card which I am now chipping away at.

I decided to keep my company running with the idea that I would use it for any freelance work which I undertook whilst I was living abroad. I managed to do this once last September, the fee from this job has been sat in my business account since then and has slowly been reduced by credit card repayments and accountants fees.

Unfortunately I now no longer have any use for the company and it is starting to cost me money personally.

I have a Corporation Tax bill of £3500 and a Barclaycard Commercial credit card bill of £1600. There's about £350 in the current account. According to my accounting software my capital assets are worth £220.

The company does not have the cash to pay HMRC or repay the Barclaycard Commercial credit card.

Could someone please advise me of the best process? I can't find any information online about whether or not I am personally liable for the credit card debt. Should I follow the SpongeBob plan or is there anything else that you can suggest?

Many thanks,

Andrew

 

[UK Contractor Accountant]

Did you sign a personal guarantee for the credit card?

If not, you are not personally liable for the debt.

 

[Andrew Grant]

Did you sign a personal guarantee for the credit card?

If not, you are not personally liable for the debt.

Not that I can remember. I took the card out years ago, i'm pretty sure that I just sent an application off to Barclaycard Commercial and a card arrived in the post not long after. Do you think it's as easy as just calling them and asking them or would that set off some alarm bells with them?

 

[Bob]

Do you have an overdrawn director's loan account?
Did the last accounts submitted to HMRC show an overdrawn director's loan account?

 

[Andrew Grant]

Do you have an overdrawn director's loan account?
Did the last accounts submitted to HMRC show an overdrawn director's loan account?

No the DLA is fine and the last submitted accounts do not show money being owed to or from the DLA.

 

[john1989]

Roughly £17.5k profit and no money to pay corp tax and minor liabilities. What happened to the money?

 

[Andrew Grant]

Roughly £17.5k profit and no money to pay corp tax and minor liabilities. What happened to the money?

Taken as dividends.

 

[john1989]

Dovidends are paid post tax. Did you overdeclare them?

 

[Andrew Grant]

Dovidends are paid post tax. Did you overdeclare them?

It's possible that I've got this very wrong then and ultimately I'm going to pay the price. I'm waiting to hear back from my accountant on this.

I only ever took dividends from the profit and from what my accounting software told me was distributable. I never took a salary from the business and therefore took a dividend usually every quarter. The business was mainly for my freelance work, so as my freelance work declined and I started to take on PAYE roles the profits fell. The only other places where the money has gone is via expenses and credit card repayments.

I am concerned that I have possibly taken illegal dividends then. What would your advice be please?