Ltd Company - now dissolved & struck off, but im being chased for my Personal Self Assessment

[Dazzler66]

Hi, so I was on this forum a couple of years ago and I gathered some really useful information. Off the back of that I completely walked away from my business which was finally dissolved earlier this year has been struck off companies house.

I owed c£70 for my DLand c£15k in Corppration Tax.

I was in a complete & utter mess as everything I had ever lived for just fell apart, including marriage, children, house, work everything just went. I was in a total breakdown which eventually led to me trying to take my own life.

I'm in a better place now but only thanks to the benefits system and the church.

Anyway, I am being chased for my own personal self-assessment for 2022/3. I've avoided it until now but the penalties are mounting up and because I'm engaged with StepChange to help deal with my personal debts I am in a position where i have to submit my Self Assesment.

My questions are as follows:

My only income in that FY was from the aforementioned, now dissolved business in the form of my DL. So what do I put on my Self Assesment - do I simply put down the total amount of my DL, even though that was from aforementioned business? If not then it's obviously going to show that i had virtually no income in that tax year?

Any advice, experience etc would be so gratefully received.

Regards

Darren

 

[MyAccountantOnline]

....

My only income in that FY was from the aforementioned, now dissolved business in the form of my DL. So what do I put on my Self Assesment - do I simply put down the total amount of my DL, even though that was from aforementioned business? If not then it's obviously going to show that i had virtually no income in that tax year?

....

Great to hear you are in a better place.

To answer your question - no you dont include loans from your former company as income.

But if it was an overdrawn loan (ie you owed the company) you may have a benefit in kind on the loan to declare.

How much was the loan and did you pay any interest to your company?

 

[Dazzler66]

Great to hear you are in a better place.

To answer your question - no you dont include loans from your former company as income.

But if it was an overdrawn loan (ie you owed the company) you may have a benefit in kind on the loan to declare.

How much was the loan and did you pay any interest to your company?

Hiya, basically the only money I had in that FY was from my Overdrawn Directors Loan account in the business that has since been struck off.

Strictly speaking in that FY other than any money associated to the business, on a personal level it would be zero?

 

[Dazzler66]

Great to hear you are in a better place.

To answer your question - no you dont include loans from your former company as income.

But if it was an overdrawn loan (ie you owed the company) you may have a benefit in kind on the loan to declare.

How much was the loan and did you pay any interest to your company?

Apologies, yes my Directors Loan was c£70k and no i didn't pay any interest on it

 

[Newchodge]

Look at it this way. During that year you received money from that company that was not a salary (no PAYE returns) and was not a dividend (no dividend declared) so must have been a loan. You did not repay that loan so it was a declarable benefit in kind.

 

[Bobbo]

To answer your question - no you dont include loans from your former company as income.

But the loan being written off would be income on some level.

Though depending on the nature of the company being struck off, OP might technically owe the Crown that £70k. (I'm assuming they meant £70k not £70.)

 

[MyAccountantOnline]

But the loan being written off would be income on some level.

Though depending on the nature of the company being struck off, OP might technically owe the Crown that £70k. (I'm assuming they meant £70k not £70.)

Yes I quite agree Bobbo but it wont apply for 2022/23 as the OP said the company was struck-off earlier this year.

 

[Dazzler66]

Yes I quite agree Bobbo but it wont apply for 2022/23 as the OP said the company was struck-off earlier this year.

Hey, can you clarify this.
So are you saying that I would record the loan as 'income' for that FY in my Self assesment.

But that i wouldn't necessarily be liable for tax on that loan due to the fact the business was struck off earlier this year?

 

[Newchodge]

Hey, can you clarify this.
So are you saying that I would record the loan as 'income' for that FY in my Self assesment.

But that i wouldn't necessarily be liable for tax on that loan due to the fact the business was struck off earlier this year?

The business being struck off affectes the business, not your personal position.

 

[MyAccountantOnline]

Hey, can you clarify this.
So are you saying that I would record the loan as 'income' for that FY in my Self assesment.

But that i wouldn't necessarily be liable for tax on that loan due to the fact the business was struck off earlier this year?

No - the loans you have taken from the company aren't income and aren't recorded on your Self Assessment tax return as income.

You may as already mentioned have a benefit in kind to report for interest unless you paid interest to the company at the HMRC official rate.

When the loan was written-off that will generally be deemed to be dividend income which you will need to include on your tax return but it wont the 2022/23 tax return as you say the company was struck-off earlier this year.

 

[MyAccountantOnline]

The business being struck off affectes the business, not your personal position.

It will effect the OPs personal tax if a loan owing to the company was written-off.

 

[Newchodge]

It will effect the OPs personal tax if a loan owing to the company was written-off.

Yes, I meant it the other way around. The OP seems to think that, as the business has been struck off he has no personal liability for tax on the money he received from the business.

 

[MyAccountantOnline]

@Dazzler66

This link explains what a benefit in kind is for loan interest -

Expenses and benefits: loans provided to employees

Tax and reporting rules for employers providing loans to employees

www.gov.uk

 

[Dazzler66]

@Dazzler66

This link explains what a benefit in kind is for loan interest -

Expenses and benefits: loans provided to employees

Tax and reporting rules for employers providing loans to employees

www.gov.uk

Thank you all for your guidance and clarification. However, I think what this is really helping me with is to write the question better so that everyone has the context. I'm going to write them out now

 

[MyAccountantOnline]

My only income in that FY was from the aforementioned, now dissolved business in the form of my DL. So what do I put on my Self Assesment - do I simply put down the total amount of my DL, even though that was from aforementioned business? If not then it's obviously going to show that i had virtually no income in that tax year?

If during the tax year 2022/23 you had a directors loan on which you paid no interest (and the loan wasn't written-off until after 5/4/23) and had no other income the only entry for income will be the Benefit in kind for the interest free loan.

 

[Lisa Thomas]

Thank you all for your guidance and clarification. However, I think what this is really helping me with is to write the question better so that everyone has the context. I'm going to write them out now

How much you owe in personal tax will be academic if you go bankrupt (based on your previous post).

 

[Dazzler66]

How much you owe in personal tax will be academic if you go bankrupt (based on your previous post).

Hi @Lisa Thomas

If I'm going personal bankruptcy, my concerns are more around the debts I owe to my now struck off & dissolved business?

 

[Newchodge]

Hi @Lisa Thomas

If I'm going personal bankruptcy, my concerns are more around the debts I owe to my now struck off & dissolved business?

Those debts died with the company. You owe HMRC for your tax liability on those loans and, when they were written off, the income. That is your personal liability and would be included in personal bankruptcy.

 

[Dazzler66]

Those debts died with the company. You owe HMRC for your tax liability on those loans and, when they were written off, the income. That is your personal liability and would be included in personal bankruptcy.

Right, very clear. Thank you so much and thanks everyone

 

[Lisa Thomas]

They died with the company.

The only potential risk to you would be if the Insolvency Service decide to investigate the company, and find you have committed misconduct. However even the consequences of any such issues are likely to be irrelevant if you are going bankrupt.