Wanting to dissolve LTD company but still owe VAT

[TOME63]

LTD Company started 2012. I have just completed my first year of financial trading and in the process of getting my accounts completed. My turnover is circ £550,000. Any profits made where always kept within the company like advertising and marketing, only money I took was to pay overheads around £5k per month which included office rent, 1 employee salary and mine and general expenditure Google/BT etc
My problem is that when completing my VAT returns I understated my sales figures to pay less VAT to help balance my cash flow. My intention was to always pay this at some point and correct my Vat figures, . At the time I could not get an overdraft or any form of investment. My customers demanded 30 day payment terms and I could not cover the fees involved in invoice factoring. So many times the stress of lack of cash flow has becomes an issue. I was then using the Vat money to help cover the strain of lack of cash.

If I close (dissolve) my company down I would lose 1 employee ( min wage) and I would not have any creditors or debtors left ( all up to date) , There would be no assets, it would just be the VAT which is around £15k owed if i declared my true sales figures. The bank balance would be below £200 and I have taken a wage through the year but nothing dramatic just enough to pay my own mortgage. I have never taken any director loans or shares.

My question is If I close the business down will the VAT office come after me when they see the correct annual returns and see that the sales don’t match the sales figures I submitted to them? Or would I have to put the company into liquidation (which I don’t want to do) Could I perhaps finish the end of year accounts but just use the sales figures that was given in the Vat submission or would HMRC check the company bank account and see what sales I had?

Sorry to ramble on abit but I really can’t cope anymore with the stress and just want out, any constructive advise would be so much appreciated.
Thank You

 

[helen0722]

LTD Company started 2012. I have just completed my first year of financial trading and in the process of getting my accounts completed. My turnover is circ £550,000. Any profits made where always kept within the company like advertising and marketing, only money I took was to pay overheads around £5k per month which included office rent, 1 employee salary and mine and general expenditure Google/BT etc
My problem is that when completing my VAT returns I understated my sales figures to pay less VAT to help balance my cash flow. My intention was to always pay this at some point and correct my Vat figures, . At the time I could not get an overdraft or any form of investment. My customers demanded 30 day payment terms and I could not cover the fees involved in invoice factoring. So many times the stress of lack of cash flow has becomes an issue. I was then using the Vat money to help cover the strain of lack of cash.

If I close (dissolve) my company down I would lose 1 employee ( min wage) and I would not have any creditors or debtors left ( all up to date) , There would be no assets, it would just be the VAT which is around £15k owed if i declared my true sales figures. The bank balance would be below £200 and I have taken a wage through the year but nothing dramatic just enough to pay my own mortgage. I have never taken any director loans or shares.

My question is If I close the business down will the VAT office come after me when they see the correct annual returns and see that the sales don’t match the sales figures I submitted to them? Or would I have to put the company into liquidation (which I don’t want to do) Could I perhaps finish the end of year accounts but just use the sales figures that was given in the Vat submission or would HMRC check the company bank account and see what sales I had?

Sorry to ramble on abit but I really can’t cope anymore with the stress and just want out, any constructive advise would be so much appreciated.
Thank You

What is your profit figures? and I am afraid you must declare the true VAT value payment, HMRC are serious people you cannot muck about with them not only that you will be struck off from companies house as well.

I think there are more you are not saying but we cannot help if you go around corners and not telling all. Yes they will come after you and so will companies house as you will need to find your year end account and corporation tax to Companies house and HMRC.

My advice is to seek professional help before you make matters worst for yourself.

hope this helps

 

[estwig]

My last ltd went belly up 4 years ago owing 16K VAT, never heard a word about it.

You pays your money and you takes your chances!

 

[Alan R Price]

LTD Company started 2012. I have just completed my first year of financial trading and in the process of getting my accounts completed. My turnover is circ £550,000. Any profits made where always kept within the company like advertising and marketing, only money I took was to pay overheads around £5k per month which included office rent, 1 employee salary and mine and general expenditure Google/BT etc
My problem is that when completing my VAT returns I understated my sales figures to pay less VAT to help balance my cash flow. My intention was to always pay this at some point and correct my Vat figures, . At the time I could not get an overdraft or any form of investment. My customers demanded 30 day payment terms and I could not cover the fees involved in invoice factoring. So many times the stress of lack of cash flow has becomes an issue. I was then using the Vat money to help cover the strain of lack of cash.

If I close (dissolve) my company down I would lose 1 employee ( min wage) and I would not have any creditors or debtors left ( all up to date) , There would be no assets, it would just be the VAT which is around £15k owed if i declared my true sales figures. The bank balance would be below £200 and I have taken a wage through the year but nothing dramatic just enough to pay my own mortgage. I have never taken any director loans or shares.

My question is If I close the business down will the VAT office come after me when they see the correct annual returns and see that the sales don’t match the sales figures I submitted to them? Or would I have to put the company into liquidation (which I don’t want to do) Could I perhaps finish the end of year accounts but just use the sales figures that was given in the Vat submission or would HMRC check the company bank account and see what sales I had?

Sorry to ramble on abit but I really can’t cope anymore with the stress and just want out, any constructive advise would be so much appreciated.
Thank You

The problem is that by deliberately submitting false VAT returns you have committed a criminal offence. It's not my area of expertise but I believe both you and the company could be prosecuted. My advice is to talk to your accountant (who is likely to have come across such situations previously) and see what he advises. It is probably possible to make a disclosure to HMRC, who will raise fines and penalties on the company, which you will have to deal with if you want it to remain in business.

Is the company solvent? I don't really understand your figures. If it turned over £550,000 but its overheads were only £5,000 a month it would seem to have made a profit of £490,000! You mention an employee and your own wages. Have you deducted and paid the PAYE for the two of you? If not, what is the liability in this regard? What were the actual profits? Does the company owe corporation tax? If the company is insolvent you should consider putting it into liquidation.

You could undoubtedly close the business and apply for striking off (I am not advising you to do this but it is certainly an option). You might be lucky and find it all just goes quietly away. Alternatively it could end up with HMRC petitioning to wind the company up, you being prosecuted for fraud and the liquidator suing you for misfeasance.

I really think you should take advice from your accountant and if necessary, from a solicitor specialising in tax fraud.

 

[Alan R Price]

My last ltd went belly up 4 years ago owing 16K VAT, never heard a word about it.

Yes but had you submitted falsified VAT returns? Were there other tax debts, such as PAYE and corporation tax? If not, then £16,000 is not a big deal for HMRC to get excited about.

 

[TOME63]

This may sound like a stupid question so forgive me in advance...

If i submit my annual returns and ensure that the sales figures are the same as the vat figures submitted to HMRC then how would they know they are incorrect because they wont check the bank will they?

 

[simon field]

They most certainly will if they inspect you, you naughty man.

 

[k100danny]

I'm unsure how with the overheads you've stated and your turnover why you are trying to hide for the sake of a very tiny amount of what looks like profit.

Banks will advance money on your invoices so i don't think HMRC will take that as an excuse. if they investigate you then yes they will check EVERYTHING. first person to be paid in business should be the vat man, then your staff.

 

[Alan R Price]

This may sound like a stupid question so forgive me in advance...

If i submit my annual returns and ensure that the sales figures are the same as the vat figures submitted to HMRC then how would they know they are incorrect because they wont check the bank will they?

You're suggesting you submit further falsified VAT returns?

 

[ob1]

Have i just imagined this. Has someone really come on to a public forum and admitted to falsifying there accounts

 

[14Steve14]

Not only falsifying accounts, trying to avoid paying what is owed into the bargain as well.
A company which I am glad I had no dealings with.

 

[estwig]

Yes but had you submitted falsified VAT returns? Were there other tax debts, such as PAYE and corporation tax? If not, then £16,000 is not a big deal for HMRC to get excited about.

Your quite right, my accounts although in the red, where very much in good order.

There was a lot of other debt, over £40k worth in total.

 

[Alan R Price]

There was a lot of other debt, over £40k worth in total.

It's a lot if you haven't got the money but most corporate failures are much larger. It can, quite understandably, be devastating for the person whose business has "gone west" but most people set out with the best intentions and while they may make mistakes, mostly they are not guilty of anything deliberate or reckless. I hope this doesn't sound patronising. People beat themsleves up a lot when they have a business that fails and generally they needn't do so.

 

[estwig]

It's a lot if you haven't got the money but most corporate failures are much larger. It can, quite understandably, be devastating for the person whose business has "gone west" but most people set out with the best intentions and while they may make mistakes, mostly they are not guilty of anything deliberate or reckless. I hope this doesn't sound patronising. People beat themsleves up a lot when they have a business that fails and generally they needn't do so.

Not patronising at all, appreciate the sentiment.

Cash flow sliding away from me was the main cause of things going South, or is it West!

I don't beat myself up, life's too short and all that.

 

[Alan R Price]

"Gone west" in my book - which was Biggles - hence it's probably a bit of an ancient expression!