Urgent Advice?

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Hi Guys,

OK this is it, i resigned late last year as a director, i just let the company run its course hoping for a strike off as last years accounts not filed, HMRC objected, there is no money owed to anybody apart from maybe to them.

Now the issue is they hunting me like a dog wanting to inspect the books, they have visited my old business address and now coming to my home, not good when i have the family here.

How do i get them off my back?

I have seen spongebobs template letter but i am no longer a director so i cannot write it.

Your advice is a much appreciated.

 

[Alan R Price]

You are obliged to give them access to the company's books and records. You also have a duty to ensure the records were written up to the date you resigned.

 

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I have old ones written up to date i.e year before last but not last years as i do not have them as my old accountant became terminally ill and i have not seen them since.

 

[UK Contractor Accountant]

Can't you just refer them to the Director currently acting for the company or have you left the company rudderless?

 

[Spongebob]

If there is another director, let them deal with it.

If there is no director, this is a good illustration of why it is not necessarily a good idea to resign as sole director of a company facing insolvency unless you are going personally bankrupt.

There is nothing to stop you sending out the Spongebob letter signed as yourself but not as a director. You could even put 'Former Director' under your name.

The effect of the letter will be the same.

What you can't do is apply to Companies House to have the company struck off. You will have to reinstate yourself as a director first.

As for them coming round - just give them a big cardboard box full of books and invoices.

 

[S Isaac]

As has been said, depends on if there is/was another director there when you left. I'm guessing if you weren't the 'last one out' then it wouldn't be down to you to deal with.

 

[endof]

So you reckon its best to appoint another director ? and even if i give the big box, wont they just come back harassing me for missing bank statement invoices etc ?

 

[Spongebob]

I think maybe you over-estimate the interest that HMRC will have in your little company. They will conduct a cursory examination of the available books to see whether any liability is likely to be hundreds, thousands, or tens of thousands of pounds. They will want to know about assets.

Only if the liability is large and if there are significant assets will they pursue the case. Demonstrate to them that the company has no realisable assets and they will leave you alone.

 

[UK Contractor Accountant]

They normally come back with questions regarding Directors withdrawals or unexplained withdrawals from the company bank prior to ceasing to trade.

 

[Spongebob]

Fair enough - if the directors have obviously had their hands in the till HMRC will want to look into it.

What can they actually do though, other than wind up the company?

 

[UK Contractor Accountant]

If its serious they can make a determination against the Director for the tax & nI lost.

 

[endof]

Probably could be high xx,xxx owed (at least ) over the last couple of years but not sure as books not done,last payments came in about a month ago (what was owed) since the company stopped trading back in April.Used to pay suppliers and myself although not officially a director that's probably where it could be sticky

No assets at all, not even a company trading address, the only vehicle the company owned was a 7 year old van that blew up on the motorway and was sold for scrap recently.

What would be the best plan of action ?

Got a friend who would become a director and appoint them or not ?

Get the letter out from "former director" ?

Get the books done and send them in and let them assess ? or just give them a few boxes less a few bank statements etc?

 

[Spongebob]

Why did you resign as a director?

 

[endof]

Well it was the mrs who was director but didnt have a lot to do with it tbh and she could see how it was panning out so she threw the towel in and get a job,i was going to appoint another one or put myself down but just never got around to it.

 

[Spongebob]

Hi Guys,

OK this is it, i resigned late last year as a director, i just let the company run its course hoping for a strike off as last years accounts not filed, HMRC objected, there is no money owed to anybody apart from maybe to them.

Now the issue is they hunting me like a dog wanting to inspect the books, they have visited my old business address and now coming to my home, not good when i have the family here.

How do i get them off my back?

I have seen spongebobs template letter but i am no longer a director so i cannot write it.

Your advice is a much appreciated.

So were you are a director or weren't you?

 

[endof]

No i have never been a director but the wife was although she had little to do with the company tbh.

 

[UK Contractor Accountant]

You will probably be regarded as a 'Shadow Director' in HMRC eyes - see below:

'A shadow director is someone who is not a named director but who directs or controls the company. It is important to identify any such person as the liquidator can take the same action against this person as can be taken against the named directors.

It should be remembered that acting as a shadow director is not an offence in itself (unless the person is an undischarged bankrupt or disqualified from being a director INS44147). But the existence of a shadow director is a risk indicator. It raises the suspicion that the shadow director is attempting to conceal something by managing the company but not being listed as one of its directors'.

 

[endof]

She ran the company financially etc but management ran day to day operations like most companies unless they are a one man band.
As for a shadow director no proof of this whatsoever, they cannot assume anything, a wife/husband cannot be automatically assumed a shadow director of a company because they are married to a director, madness.

 

[David A]

She ran the company financially etc but management ran day to day operations like most companies unless they are a one man band.
As for a shadow director no proof of this whatsoever, they cannot assume anything, a wife/husband cannot be automatically assumed a shadow director of a company because they are married to a director, madness.

You need to think pragmatically about this.

Should you (or more correctly,your wife) ever receive a visit or a letter from anyone, than an honest answer is all that can be given: No director of company XYZ lives here. Please refer your enquiries to the shareholders who will be able to tell you if another director has been appointed.

Of course, should they ask who is the shareholder and it turns out to be the same person they are speaking to (or have written to) then again a truthful answer must be made: no replacement director has been appointed, nor can there be, as the company does not have the means to provide any sort of remuneration, and remunerating a director of an insolvent company is not something that the shareholders are prepared to finance from their own resources.

Just stick to the above. Eventually Companies House will strike off the company themselves.

 

[Alan R Price]

There appears to be more to this than meets the eye. OP seems to be unsure who was running the business, and now he wants to appoint somebody else as a front man; the company's accounts are not written up to date; there are "£xx,xxx" worth of tax liabilities. He says he "Used to pay suppliers and [himself] although not officially a director. . ." Quite what that means is unclear to me, however it seems to indicate, at least, that there was a deliberate policy of not paying HMRC; and that there was some subterfuge in the way the company remunerated him.

HMRC and the official receiver will not just be interested in who was registered as a director - they will want to know who was actually running the company - who told whom what to do; what authority the people working for it had to order goods, deal with customers and creditors; who signed the cheques; who dealt with negotiations over contracts, debts, etc.

A shadow director is defined as "a person in accordance with whose directions or instructions the directors of a company are accustomed to act". So if OP was telling his wife what to do, and exercising real executive authority over the company's affairs, he was a shadow director, or possibly a "de facto" director - it amounts to the same result in terms of responsibility and liability.

My advice? OP should seek advice from an insolvency practitioner and possibly a criminal lawyer, because it all sounds rather smelly to me.

 

[endof]

Thanks for your sympathy but lets get some facts.

No nothing shady at all, in fact what you are ensuing is completely wrong.

The accounts were up to date for two years until the accountant was diagnosed with a brain tumour and that's when it all went wrong, the company never got another accountant.

When i said she never had a lot to do with it, i mean she had a manager to do the donkey work and day to day running and that she paid the suppliers etc signed cheques etc.

Remember the company was a tiny company with just three people and when you have them knocking the door and her father who is terminally ill, it is not a good time that was the reason for myself to be appointed or somebody else.

Over the past couple of years HMRC have has six figures from the company so there is nothing deliberate, the worst case they may say the company have paid suppliers etc over them which happens with most companies.

 

[Alan R Price]

Thanks for the post. While things are a little clearer, it is still not obvious what your role was in the business, who was running it, why you were not a director, or what the apparent subterfuge was surrounding the payments to you. If you need advice, you need to give us all the facts. At the moment it all looks to an independent observer like people hiding behind others for reasons best known to themselves, in a business that has run up considerable tax debts.

I still recommend speaking to an IP though, even if you feel you don't need the advice of a criminal lawyer.

 

[endof]

I was not a director because i had other interests elsewhere, yes i helped when needed but i guess thats what husbands,wifes,brothers and sisters do when its needed like now.

What is a considerable tax debt ? in the bigger scheme of things it is relatively small compared to companies going down every day for a hell of a lot more.

They have has more than their fair share in the past and nothing has ever been reclaimed not a single penny. Yes tax will be owed but is that not the same with thousands of companies going down everyday.

 

[Charlie B ACS]

What is a considerable tax debt ? in the bigger scheme of things it is relatively small compared to companies going down every day for a hell of a lot more.

They have has more than their fair share in the past and nothing has ever been reclaimed not a single penny. Yes tax will be owed but is that not the same with thousands of companies going down everyday.

£High 5 Figures, more then most will earn in 4-5 years, let alone the Tax on it. If you have taken payments in preference, then you should be investigated, and made to pay it back.

If it wasn't made in preference then you point of view may be valid. But you will have paid your fair share, as thats what tax is, avoiding it is just criminal

 

[David A]

... thats what tax is, avoiding it is just criminal

Arranging your affairs to avoid paying a penny more in tax than is due is the duty of citizen, and is a basic reason why accountants earn their fees. It is only tax evasion that is unlawful.

 

[Charlie B ACS]

David, I agree, and I perhaps misworded my statement.

In this case the OP is potentially avoiding / evading Tax that is due, becuase of preference payments to himself.

Which is, I hope you agree, a different kettle of fish

 

[MikeJ]

Yes tax will be owed but is that not the same with thousands of companies going down everyday.

Pedantic, I know, but well under 100 companies fail each day

 

[simon field]

Even more pedantically, out of those probably only a fraction are actual companies

 

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First of all the affairs have been sorted out, the final figure was less than £5k, i guess that's why the books needed to be done to get the true figure, so happy days all around.

I don't where you guys get your figures from but the fact is this:

Over 1000 companies fail every day, over 500,000 per year:

I cannot post the link as i don't have 30 posts but the above are verified facts fro 2010.

 

[MikeJ]

https://fullfact.org/factchecks/do_70_businesses_fail_a_day-27256

 

[endof]

I got totally different official figure but cannot post it because of the 30 posts and doubt whether i will get there tbh

 

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All i can say is if you go to "the gazette" and check how many thousands get struck off every 3 months and its not hundreds but anyways who cares.

 

[mhall]

I don't want to muddy the waters as it seems to be getting a little tetchy but in relation to Shadow Directors, I can confirm that HMRC can, and WILL assume you are a shadow Director - its a case of guilty until proved innocent. My Hubby has a relationship with a couple of our suppliers going back years and has always chatted and negotiated with them on our behalf - it made perfect sense. A few years a go during a VAT inspection, the inspector noted that one of the emails from one supplier addressed Hubby as in - "further to our chat Mark". That was all the "evidence" they needed to list him as a "shadow director".

No big deal for us, but in chatting to the inspector he told me its the sort of thing they are trained to spot as the more names they can get in the frame the better if things go wrong and sometimes they just ring up suppliers and ask who they deal with.

 

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So that's means the cleaner is a shadow director because she negotiated with the suppliers regarding cleaning suppliers...

I wonder how buyers for companies get on, are they all classed as directors because they negotiate with suppliers or as usual HMRC terrorizing the small companies whilst the large ones rape and pillar the system?

Ah well who cares the companies issues have now been sorted,thanks to a great accountant.