Owe VAT and Corporation Tax - sole director - am I liable?

Discussion in 'Accounts & Finance' started by Derek_, Apr 10, 2012.

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  1. chuckles

    chuckles UKBF Ace Full Member

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    'Gambling' and 'luckily' are key words here, so again unfortunately I don't agree with the cynics.
     
    Posted: Jan 20, 2013 By: chuckles Member since: Jun 14, 2012
    #81
  2. Paul_Rosser

    Paul_Rosser UKBF Big Shot Full Member - Verified Business

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    I'm not criticsing the OP (or anyone else in that situation), they have already been given some excellent advice by Spongebob/Alan Price and the issue is now resolved I believe.

    However for anyone else reading this who is maybe in the first month of dipping into the CT/VAT to pay the bills/dividends, just make sure you keep a proper eye on the finances of your company so you don't end up with a big suprise when it's time to pay the HMRC. Maybe this will include doing monthly accounts and seeing where you can cut back on costs.

    Companies who have to buy stock etc. to startup are in a much more dangerous position as they have to invest money heavily to start with, companies providing a professional service are much less at risk as all you really have to ensure is that you have enough profit to pay yourself enough to live on.

    But the danger with both is still taking dividends without accounting for CT/VAT and hoping to get enough business in to cover those in the coming months.

    Also have to add the caveat that I worked for an accountancy firm (and now run a consultancy tied to accounting) so I understood from day one how Corporation Tax and VAT work. Lots of startups don't really, so ensure you get some advice from your accountant, or places like UKBF so you properly understand what it costs to run a company.
     
    Last edited: Jan 20, 2013
    Posted: Jan 20, 2013 By: Paul_Rosser Member since: Jul 5, 2012
    #82
  3. Paul_Rosser

    Paul_Rosser UKBF Big Shot Full Member - Verified Business

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    Luck plays a massive part in business, you can do your best to avoid firms not paying, getting enough orders in etc. but sometimes luck is just on your side.

    Sometimes you can be unlucky enough for some of your customers to be bought out by bigger firms so they stop using you and unlucky enough for some of your customers to go under leaving you in debt.


    But sometimes you can be luckily enough for all your customers to pay on time and lucky enough to get enough clients to make a big profit without doing any marketing at all. ;)
     
    Last edited: Jan 20, 2013
    Posted: Jan 20, 2013 By: Paul_Rosser Member since: Jul 5, 2012
    #83
  4. BelindaChong

    BelindaChong UKBF Contributor Free Member

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    I have found this thread very interesting. I can see that I am probably over cautious as I always keep the tax and vat money separate. My great fear has been not having the money available and the tax man bringing my life to a metaphorical end! My husband, who is self-employed, puts his tax money into premium bonds so that he has a small chance of getting a return, but has the money available when he needs to pay his tax. He does this by making a loan from the company to himself.
    Any views on this practice?
     
    Posted: Jan 20, 2013 By: BelindaChong Member since: Nov 11, 2012
    #84
  5. Tej

    Tej UKBF Newcomer Free Member

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    Business is 90% luck... 10% pluck..IMHO
     
    Posted: Jan 20, 2013 By: Tej Member since: Oct 26, 2008
    #85
  6. Paul_Rosser

    Paul_Rosser UKBF Big Shot Full Member - Verified Business

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    I would go 80% luck, 10% pluck and 10% timing.
     
    Posted: Jan 20, 2013 By: Paul_Rosser Member since: Jul 5, 2012
    #86
  7. chuckles

    chuckles UKBF Ace Full Member

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    Good post. Good advice.
     
    Posted: Jan 20, 2013 By: chuckles Member since: Jun 14, 2012
    #87
  8. Tej

    Tej UKBF Newcomer Free Member

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    Timing is luck itself :)
     
    Posted: Jan 20, 2013 By: Tej Member since: Oct 26, 2008
    #88
  9. Paul_Rosser

    Paul_Rosser UKBF Big Shot Full Member - Verified Business

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    Do you mean a directors loan ? If so then thats fine provided he can repay it when needed to pay for tax.

    Personally we put the VAT/CT money into a seperate account so it makes a little bit of interest for the company.
     
    Posted: Jan 20, 2013 By: Paul_Rosser Member since: Jul 5, 2012
    #89
  10. Paul_Rosser

    Paul_Rosser UKBF Big Shot Full Member - Verified Business

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    Yeah could be.

    Luckily we have both luck and timing ;)
     
    Posted: Jan 20, 2013 By: Paul_Rosser Member since: Jul 5, 2012
    #90
  11. chuckles

    chuckles UKBF Ace Full Member

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    Yep, very true words.

    Anyone who is successful and says its all down to being clever, either has a short memory or is arrogant (and I've sure met a few of them !)
     
    Posted: Jan 20, 2013 By: chuckles Member since: Jun 14, 2012
    #91
  12. Paul_Rosser

    Paul_Rosser UKBF Big Shot Full Member - Verified Business

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    Plenty of clever people who have a go at running a business and never make it work, usually because they believe they are too clever to need anyone else's help/advice.

    Understanding the industry you are going into and being clever enough to realise you will need help from others is the best way to ensure a success.
     
    Posted: Jan 20, 2013 By: Paul_Rosser Member since: Jul 5, 2012
    #92
  13. chuckles

    chuckles UKBF Ace Full Member

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    Nothing wrong with it. Keep doing it if you can.

    The problem comes when cash flow unexpectedly hits a problem and you need to pay essential bills. The money has to come from somewhere.
     
    Posted: Jan 20, 2013 By: chuckles Member since: Jun 14, 2012
    #93
  14. chuckles

    chuckles UKBF Ace Full Member

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    Agreed, however I was thinking about those who become successful and think its solely because they are clever !
     
    Posted: Jan 20, 2013 By: chuckles Member since: Jun 14, 2012
    #94
  15. Paul_Rosser

    Paul_Rosser UKBF Big Shot Full Member - Verified Business

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    They are clearly deluded as luck plays such a big part, right place right time etc. You can be clever too, but I suspect you are talking more about the arrogant folk.

    Also anyone who has really made it will have made some god awful (and not very clever) decisions along the way, but provided the ones which went right pay enough then it all works out.
     
    Last edited: Jan 20, 2013
    Posted: Jan 20, 2013 By: Paul_Rosser Member since: Jul 5, 2012
    #95
  16. chuckles

    chuckles UKBF Ace Full Member

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    They will quickly forget those 'bad' decisions though and believe they only made 'good' ones.
     
    Posted: Jan 20, 2013 By: chuckles Member since: Jun 14, 2012
    #96
  17. Paul_Rosser

    Paul_Rosser UKBF Big Shot Full Member - Verified Business

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    Then in the future they will repeat the same mistakes.

    Everyone makes mistakes, but it's only a problem if you don't learn from them.
     
    Last edited: Jan 20, 2013
    Posted: Jan 20, 2013 By: Paul_Rosser Member since: Jul 5, 2012
    #97
  18. Alan R Price

    Alan R Price UKBF Newcomer Free Member

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    After 35 years in the insolvency profession, the last 24 as a licensed IP, I can say, I hope with some authority, that very few people set out deliberately to defraud creditors or evade tax. And those that do often get found out - believe it or not.

    What I see most often however is people who have had no training in running a SME (i.e. most of them) getting into problems because they focus almost solely on the issues inside the business - the operational issues - rather than on planning, forecasting and then testing and measuring their results. They suddenly discover they have a tiger by the tail and end up losing their business, their home, their health and their marriage.

    Most SME owners would benefit from getting some mentoring or coaching. In some cases it is possible to find grant funding to cover at least part of the cost; and there are voluntary organisations around that supply a cheap or free mentoring service. For businesses that believe they cannot afford a personal coach, there are business clubs that meet regularly at a greatly reduced subscription, where they can obtain group coaching and find support, ideas, inspiration and indeed accountability from other business owners. It's a big, bad lonely world running an SME. Get some support - you can't do it all yourself!
     
    Posted: Jan 21, 2013 By: Alan R Price Member since: Jul 5, 2010
    #98
  19. Gabster65

    Gabster65 UKBF Newcomer Free Member

    5 1
    An update on my situation. As far as I'm aware, the striking off process is continuing. I have written to and spoken with HMRC Corporation Tax and VAT Collections Departments. I have not receieved any correspondence back from either and both were helpful and seemed sympathetic on the phone.... HOWEVER ... I'm now being harassed by DrydensFairfax on behalf of HMRC! They are phoning my house, sending threatening emails, phoning my personal mobile and texting me! According to one very persistant person there, I'm personally liable (as a director) for the monies owed. I spelt it out as I understood it and told them that constant harassment would not make any difference - no business, no assets (only debts!) and me currently being in a debt management program! Still they will not go away..... Can anyone help please?
     
    Posted: Mar 5, 2013 By: Gabster65 Member since: Jan 15, 2013
    #99
  20. BTWales

    BTWales UKBF Newcomer Free Member

    145 4
    See this thread has been resurrected.

    Back to the OP - I also do this. How on earth can you take dividends out of non-profit? did you have an accountant?

    Not being funny but its not hard. Its not like there are many costs in our business....

    Basically, what you're saying is you've been leading the life of riley spending it all and now its caught up with you.

    So, the rest of have to pay tax but you don't. Hope you did end up going to jail to be honest....

    Stupidity is no excuse...
     
    Posted: Mar 5, 2013 By: BTWales Member since: Aug 25, 2010
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