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Closing my Company- HMRC risk of Bankruptcy etc?


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Hi all,

 

I have posted before about my struggle to strike off my company, which ceased trading about 18 months ago. I was a contractor, and my life basically fell apart in Nov 09 when my partner left and lost his job, and I also lost my job, all within a month. I had enough money in the company to pay my liabilities at that time, but due to being advised I couldnt claim benefit, I had to use the money in dividends to survive with my child. I couldnt find any more contract work, and accepted a permanent job in Feb 10, which meant I had to move counties, thus using up the last of the company money. I intended to ditch the perm role as soon as I could find another contract, but they just were not out there (I work in defence, and teh govt were closing all teh projects, plus being a single mum I couldnt be away from home like i could before) unfortunately as I was so depressed and screwed up from everything that happened I was fired from the perm job as I wasnt performing. I then went onto income support and housing benefit etc. I am now officially on working tax credit as I joined a govt scheme to set up as a sole trader, but this has never really happened for one reason and another, and I am considering going back onto income support.

 

In any case, the company (a PLC) owes HMRC about £600 VAT and £6500 Corp Tax. I do not have it, I am barely able to make it thru the month feeding my son quite frankly. I have no assets either. The Corporation Tax people have just asked me to fill in a form listing assets and what was in the company when it closed etc (I ceased trading officially in Feb 10). I am wondering what to do- I am sure they will press me for payment, but I simply cannot afford it. I am terrified of bankruptcy, as it will ruin my future for the next years, and my sons. We will not be able to move from teh house we're in as no reputable landlord will accept us with a bankruptcy, and I would be 42 before I could consider ever buying a house. We are so vulnerable already, and I have nothing to give them, it would just cost them more money to make me bankrupt than not, but I don't know what they are likely to do. I know I'm liable for the money as I took it in dividends, and since they have opposed strike-off, I have to confront all this. Naturally, no one can tell me what is likely to happen, what the process is, or who the nameless 'inspectors' are or how to speak to them.

 

Does anyone know whether they will take my circumstances into account when making a decision? Or if there is anything I can say that will trigger a compassionate response, or do to help secure a more positive outcome? Or even if they have a threshold for bankruptcy? Everyone so far at HMRC has said this is peanuts to them, but I know what they're like. Should I try and make a full and final offer? Should I write a letter of explanation with teh form I need to fill in, or should I keep my powder dry for now?

 

ANY help would be massively appreciated, I am really worried about this. I ahve spent the last 5 years trying to recover from teh debts my previous partner left me with, which will be cleared in 2012, and I was so hopeful that we could have a fresh start, I will be gutted if I am made bankrupt.

 

Thanks in advance.

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I refer you to the advicee I gave you some months ago about how to go about getting the company struck off. If you had acted on it then it would all now be over

 

The advice was this

Next if the strike off is not live you are going to have to start at the beginning again on this.You need to write to all creditors stating that the Company has ceased to trade and has insufficient funds to appoint a Liqudator and invite them to issue winding up proceedings themselves. If the Company is not subjet to winding up proceedings state that you intend to apply for a strike off after three months from the date of the letter under s1003 of the Companies Act. HMRC may or may not object to the strike off again but either way you have sent the letter to them as required by law and if they do object just send a letter to Companies House showing them that you intended to apply for a strike off.and all creditors have been informed of this

 

Also when you apply for the strike off send a copy of the DS01 to the creditors as well.

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Personally I think you may have answered your questions already. You state HMRC have opposed the striking off already. HMRC will at some point issue winding up proceedings and the company will be wound up. As far as the corporation tax is concerned that will be it. The liquidator will more than likely look at the way the dividends were taken and if the company did not retain profits then you may be asked to return them. I see the company was a PLC, was the called up share capital paid? From my experience a PLC company has a minimum of 50,000 shares. The liquidator will see this as an asset, the balance payable on the shares will be called up.

 

Whilst I appreciate you do not want to go Bankrupt it may be the best option. You sound as if you are under tremendous pressure already and this may cause you either further distress. As a single parent I can understand how you feel.

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I refer you to the advicee I gave you some months ago about how to go about getting the company struck off. If you had acted on it then it would all now be over

 

The advice was this

 

 

Also when you apply for the strike off send a copy of the DS01 to the creditors as well.

 

I did act on it- they have opposed the strike off, as I stated above.

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there was £100 in shares- 100 shares. The company was set up so that I could work alone as a contractor, it wasn't a big corporation or anything.

I don't see how me going bankrupt will do anything but impede my future frankly- I have nothing for them to take so it's a huge waste of their time and resources too. I know from a friend who works in VAT that they are supposed to take special care in cases where people are sole parents and/or on low incomes, as obviously those are very vulnerable categories, so i am wondering if I should send a letter with the form they want filled stating my circumstances. bankruptcy will just make me and my son even more vulnerable. Yes I took money out in dividends but I wasnt trying to hoodwink them, I had no choice but that or starve/default on my rent etc, and I was actively looking for more work to keep the company going. Or so i thought. My accountant was utterly useless and gave me no advice about striking off, and I am pretty sure the advice from the benefit office was suspect too.

 

What I need to know now is what their criteria are for bankruptcy, or their cut-offs etc, and whether this is inevitable, whether I ccould make some kind of payment plan that wouldnt be too challenging, whether they will look at my circumstances in any detail etc...

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I did act on it- they have opposed the strike off, as I stated above.

My advice was to apply again even though the first application was objectedd to but this time write to them as suggested and inform them of what you are doing. In that way you have fulfilled your obligations to them. The alternative is, as crabbingtime stated, let them wind the company up but they will then pursue you personally for any overdrawn DLA

 

there was £100 in shares- 100 shares
With this share capital the company would not have been a PLC.

 

My advice would be to ignore any contact with HMRC and see what they do and also apply for the strike off. HMRC have pretty much scrapped their time to pay scheme and are taking a fair tougher stance on creditors now but if you can get the strike off through you may swerve the bankruptcy route. HMRC could reinstte the company but for the sums you are talking about it is doubtful.

additionally, bankruptcy will prevent me trading under another company and effectively that will stop me working for 6 yearslink3.gif
Why would this be?
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Ignoring them would be fatal, I'm sure. It states that all over their correspondence and I would never advise anyone to do that! In fact in the latest letter it states that if I ignore it they will begin legal proceedings within 14 days.

 

This is the second time I've applied for strike off and the second time they've objected- the first time because the returns were not in, and this time because the tax is not paid. They know what the circumstances are (roughly speaking). I doubt very much that asking them to let it ride so I can avoid paying, would wash really otherwise everyone would do that. With hindsight, had my accountants been advising me anywhere near properly, they should have advised me to close the company immediately I lost my contract, before it all got flagged up, but that's done now.

 

I'm in the process now, I need to find the buttons to press to get out of it or at least minimise it. One thing I've found is that apparently they are very careful with issues of mental health, so I think it may be time to drag out the doctors notes relating to my depression.

 

You only need a minimal amount of shares to start a PLC- £100 was the nominated amount as advised by the accountant at the time of setting up, and I was the only shareholder. It was only set up so I could work as a contractor.

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You only need a minimal amount of shares to start a PLC- £100 was the nominated amount as advised by the accountant at the time of setting up, and I was the only shareholder. It was only set up so I could work as a contractor.
There is a minimum share capital for public limited companies: Before it can start business, it must have allotted shares to the value of at least £50,000. A quarter of them, £12,500, must be paid up. Each allotted share must be paid up to at least one quarter of its nominal value together with the whole of any premium.

This is the second time I've applied for strike off and the second time they've objected-
Did you send them the letter informing them they you intended to apply for a strike off?

 

And the overiding point that you seemed to have missed is that you do not personally owe HMRC for the unpaid VAT and Corporation Tax the company does. This would only become a problem if the company is liquidated and the OR finds that you are liable for illegal dividends or alternatively an overdrawn DLA. So either do nothing and let HMRC wind the company up and then deal with the OR or get your accountant to restate the accounts showing that you took the payments as wages subject to PAYE/NI and not dividends. This will erradicate the problem of o/d DLA or illegal dividends and increase the liability to HMRC which the company is liable for not you.

Edited by toddle2u
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There is a minimum share capital for public limited companies: Before it can start business, it must have allotted shares to the value of at least £50,000. A quarter of them, £12,500, must be paid up. Each allotted share must be paid up to at least one quarter of its nominal value together with the whole of any premium.

 

Did you send them the letter informing them they you intended to apply for a strike off?

 

And the overiding point that you seemed to have missed is that you do not personally owe HMRC for the unpaid VAT and Corporation Tax the company does. This would only become a problem if the company is liquidated and the OR finds that you are liable for illegal dividends or alternatively an overdrawn DLA. So either do nothing and let HMRC wind the company up and then deal with the OR or get your accountant to restate the accounts showing that you took the payments as wages subject to PAYE/NI and not dividends. This will erradicate the problem of o/d DLA or illegal dividends and increase the liability to HMRC which the company is liable for not you.

 

I have not missed the point- I took the money in dividends so ultimately I am responsible for it. Had the company been struck off I suspect they would not other chasing for it, but it hasn't been struck off and I need to try and protect myself as best I can because inevitably this will now be discovered.

 

I cannot AFFORD an accountant now (and the accountant I had was atrocious), hence many of the problems I have been having trying to get to the bottom of this mess. And if my dividends were restated as PAYE I could not AFFORD to pay the outstanding taxes on those either. Ignoring HMRC is the one thing that every agency tells you not to do, as it will make their repsonse much harsher when they finally do catch up with you.

 

If anyone has any advice relating to my current situation, and how best to deal with HMRC at this point, I would be grateful.

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And if my dividends were restated as PAYE I could not AFFORD to pay the outstanding taxes on those either
You wouldn't have to as it would be a company debt and not yours!

 

Did you send them the letter informing them they you intended to apply for a strike off?

Did you do this because if you did you could send a copy to CH and object to their objectoin to your strike off because you had let all creditors know you intended to apply and they did nothing about it so the strike off should be allowed.

 

I am trying to help you here and dealing with insolvent companies is what I do for a living!

Edited by toddle2u
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The HMRC would continue to object to the striking off of the company. Any creditor can object to its striking off.

 

I am concerned that you believe you would be restricted from working for six years. THIS IS NOT THE CASE! Any bankrupt is entitled to work and earn a living. You would have to keep accounting information that your Trustee may want to keep a check on. Bankruptcy does not have the stigma attached to it these days that were there formally, you would more than likely be discharged in less than 12 months. I can understand your frustrations that you have come this far by re-paying funds you owe to various creditors but sometimes we have to admit defeat.

 

My advice would be let the HMRC wind the company up for a start. The Official Receiver would be appointed as Liquidator and you would then have to deliver information to them relating to the company affairs. Only at this point would any enquiries be made into the 'dividends' you have taken from the company. How were they written in the accounts? Personally I think you are worrying about nothing apart from the fact you do not want to go bankrupt.

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The HMRC would continue to object to the striking off of the company. Any creditor can object to its striking off.

This is correct but if she has written to them informing them of the proposed strike off (as suggested some months ago) then she can produce a copy of the letter to CH and object to their objection and CH will let the strike off go through.

 

Agree entirley with the rest of your post crabbingtime.

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I am not convinced that CH would change their view given HMRC have already indicated their intention to issue winding up proceedings. In any event in CH did change their view and allow its striking off HMRC could simply, at the time of hearing the petition, ask for the company to be restored to the register and wind it up that way.

 

I am convinced electrica77 has nothing whatsoever to worry about. Unfortunately many people have an opinion of Bankruptcy. As I stated above nothing in life really changes given the position you are in.

 

Good luck with what ever you decide.

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CH did change their view and allow its striking off HMRC could simply, at the time of hearing the petition
At the hearing of what petition? The company was applying to be disolved so there would be no hearing of any petition.

 

if HMRC are determined to wind up the ompany then there is no point trying further to get it struck off as they would simply reinstate it to do the winding up

Whilst true they could do this the reality is that for such a small amount it wouldn't happen. If she manages to get the strike off through there is no liquidation and therefore no investigation by the OR

 

At the end of the day it's up to the OP what they want to do. She has had plenty of advice of the months and has chosen to ignore most of it

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Toddle2U I have absolutely NOT ignored the advice I've been given, and I find it incredibly presumptous and rude of you to keep trying to make out that I have. This board is supposed to be about getting advice and help, and frankly I dread looking at this thread at the moment because of your patronising tone. It is hard enough finding the strength to deal with this without being made to feel like a fool every time I ask a question or try and relate what has happened. You don't seem prepared to believe that your initial advice didn't go the way it should have, and now you want to make it some sort of personal failing of mine. I was very appreciative of your advice before, and I followed it, but I need a strategy for dealing with NOW, and the turn that things have taken. I have been asked to fill in a form by the Revenue which states what the assets in teh company were at the time of ceasing trading, etc after which the Inspectors will presumably make some sort of decision about what to do- either wind it up or waive the debt (unlikely). I know that they wont look at the dividends just yet, but I think it's a matter of time, and I want to be prepared. I suppose there's a small chance that the strike off will go through and they'll sod off entirely but its unlikely. In fact I think they have already mentioned the dividends, so I'm pretty sure it's going to be an issue, in which case it does become my personal problem.

 

The issue of making dividends PAYE is that the income tax and NI on that would have to be paid by me as per the rest of my personal tax, surely? So again it becomes my personal issue and I will definitely have to pay it then. The company isnt liable for the tax of its employees, it comes out of the employees wage.

 

I have applied for strike off and it has been objected to, that is the current situation. Yes I informed them I was striking off. Yes I am worried about bankruptcy because it will materially affect my future. I won't be able to get another tenancy through an agency with it on my record as they give a flat no, even when its discharged. I won't be able to keep my bank account which will make the already work intensive job of single parenting REALLY difficult, and make it very difficult to pay rent reliably or recive child maintenance etc etc. WE are already very vulnerable, on the poverty line and I do not want to make it even worse.

 

"Did you do this because if you did you could send a copy to CH and object to their objectoin to your strike off because you had let all creditors know you intended to apply and they did nothing about it so the strike off should be allowed."

 

I don't understand this- the creditors HAVE done something about it, they've objected to the strike off. That is the point of this process and the advertising in the gazette etc. I don't understand what more you think they should have done or why their objection should be reasonably disallowed? Perhaps if you explain that, this whole issue will become clearer.

 

I do appreciate your time and help, but either we are misunderstanding each other, or I am not understanding the process in some way that is not clear.

Edited by electrica77
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This is correct but if she has written to them informing them of the proposed strike off (as suggested some months ago) then she can produce a copy of the letter to CH and object to their objection and CH will let the strike off go through.

 

Agree entirley with the rest of your post crabbingtime.

 

I agree that they probably wouldnt have it reinstated. I have a friend who is a VAT inspector, and his advice has been to be open with them from the beginning, tell them my circumstances, explain I cant pay, I'm vulnerable blah blah (they do actually have guidleines about dealing with single parents and people in poverty etc), and to say I am willing to talk to them about payment plans or even make a final offer of a few hundred if i can, but to be honest etc. He says that if he put my case in front of his boss he would be told not to chase it or make me bankrupt, because its such a trifling amount in their terms (and in fact other people i've spoken to on the phone have said much the same) and because of my circumstances it would reflect badly on them. He says a county court judge would probably chastise them for wasting his time as there is no money to get etc etc.... All sounds good until you read info on here that other people have experienced, or what Tax Aid say about it etc, which is essentially that they will make you bankrupt anyway to prove a point, and they are (under the Tories) almost completely unyielding. I am very confused by the lack of consistency in these accounts of what to do and how to go ahead.

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electrica - lets start again on this one.

 

You have sent notice to HMRC stating that you intend to apply for a strike off and they have not done anything about this apart from object to the strike off. By writing to all notifiable parties (i.e HMRC) you have fulfilled your legal obligations in applying for a DS01 (strike off). Therefore you are now in a position to write to CH and object to the objection. You need to write to CH and enclose a copy of the notice you sent to HMRC informing them of your pending application. Since then you have had no further communication from HMRC regarding the DS01 and therefore you object to their objection because they have not applied to have the company wound up.

 

However, even if the company does get struck off this does not help you personal tax liability.

 

The issue of making dividends PAYE is that the income tax and NI on that would have to be paid by me as per the rest of my personal tax, surely? So again it becomes my personal issue and I will definitely have to pay it then. The company isnt liable for the tax of its employees, it comes out of the employees wage.

 

The above is incorrect in that PAYE/NI liabilities are liabilities of the company and not yours. Therefore by re-stating the accounts to reverse your dividends to PAYE/NI you increase the company liability to HMRC and decrease your liability to them personally.

 

I won't be able to keep my bank account

 

In bankruptcy you can get a bank account with Natwest or Co-Op which also has online banking and allows DD’s and SO’s.

 

I have no reason to question what your VAT inspector friend has told you and would have thought he would have been best placed to know the inner workings with HMRC and how they deal with situations such as your own.

 

Therefore it would seem your options are;

 

1) As per your friends advice try and make a low F&F offer to HMRC and see what they say.

2) Re state the dividends to PAYE/NI to reduce your personal liability and do nothing with the company and wait for either HMRC to wind it up and face the Official Receiver or CH strike it off automatically due to failure to file annual return and accounts

3) Re state the dividends and object to HMRC’s objection as per advice above.

4) Do nothing and wait for either HMRC to wind it up or CH to strike it off. The problem with this one is that if HMRC wind it up your o/d DLA will still be there and the OR will want it back

 

If anything in the above is not clear please ask

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  • 3 months later...

Sorry posted this on the other thread I opened originally, I forgot I had two.

 

Hi,

 

Update: Still no resolution! Quelle suprise!

 

I was asked by HMRC to submit a really simplistic form with details of the company finances on it some months ago, which I duly did, and enclosed a covering letter explaining in some detail the circumstances of the company ceasing trading, and my aggravating personal circumstances. I got no reply. A few weeks later I rang to ask them what was going on. They said they had received the letter, and the file was with 'the investigators'. I asked what this meant, and they said they couldn't tell me who these 'investigators' were, where they were based, or give me any number for them, as they weren't in the same department and didn't know anything about what they did. A typically useful HMRC response, as I have found out. I was however told that it looked as though they would be writing off the debt, and that when that happened they would withdraw their objection to the strike-off. I clarified this, and the man insisted this was the case, he also told me that I should just assume it had happened if I didn't hear anything (which I told him was a ridiculous thing to say when dealing with the HMRC and their 'system'). I decided to leave it a bit and contact them again.

 

In the meantime, some health concerns have taken priority, and I have heard nothing from any part of HMRC to do with the company, except that they are still sending letters asking for things like accounts to be filed or PAYE to be paid when I have clearly told them the company has ceased trading. I have looked at companies house a couple of times, and no strike off has occurred.

 

Today, I rang up Companies house to establish what was going on, and they said HMRC lodged another objection to the strike off in October (well after my letter asking them to withdraw their objection and explaining what had happened was sent). When I asked why they did this, they said creditors can do this to prolong the period of objection. I asked if there was anything I could do, as HMRC have made no communication with me and no moves to wind up the company and they said no, and that HMRC have to withdraw the objection themselves but I could write to them and they would 'look at it'. I tried to clarify whether that meant they could remove the objection (as toddle2u had previously advised), and they said not really, unless there were some exceptional circumstances. I find it unbelieveable that they can just keep a company open like this, indefinitely, without taking any action.

 

I am absolutely livid! I cannot believe the irresponsibility of HMRC. Not only making it impossible to contact *anyone* with the faintest clue about what they are doing, what I should be doing, or what the hell they actually want at this point, but deliberately drawing out a process in which they are doing nothing!! They haven't even acknowledged my letter! I have had zero contact. The letter must have been sent at least three months ago now. I just want this dealt with and to move on with my life. I made it very clear that I was suffering from stress and depression, and frankly I think their behaviour borders on harassment. telling someone to 'assume' debts have been written off (which I don't believe for a minute) is appalling!

 

I am totally at a loss as to what to do now. I'm going to ring HMRC tomorrow and find out why they are objecting again, and see if I can get any sense out of them about what is happening and who I need to speak to. I just feel like even though I am speaking to the supposedly right people and making myself available for contact, and trying to resolve things properly, they are abusing their position. They don't appear to be handling anything in the regular way- any other person on here applies for strike off and it happens, I truly do not understand why I cannot get this company closed. The entire system is a f*cking mystery (ie laughable series of encounters with people working in silos who have no clue what the hell anyone else does or how you can resolve anything), and they won't explain it. If they say I haven't filed yearly accounts I'll hit the roof. It's not like there is even a regulator or an advisory body you can go to about this. I don't even know who I can usefully contact at this point, since the regular corporation tax people say its out of their hands, and I can't get details of the 'investigators'. I will write to Companies house, but I don't even know what to say... 'HMRC are ignoring me'??!

 

Any advice?? Toddle2U you mentioned before that you have had objections removed at Companies House before- can you tell me how? Is there particular wording to use etc?

 

Thanks.

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Right. I have spoken to the inland Revenue again today, and they have confirmed that they will not be taking any legal action 'at the current time', but if my circumstances change, I should contact them to make payments. So basically they are just keeping the company open (even though it's a PLC) in case I managed to recover from being a single mother on benefit and have some unspecified sum to throw their way each month for an unspecified time. They wouldn't give me the name, number (great way to get people to call for payment) or department of the person who is dealing with this now, the reason behind the decision, or any time limits. They couldn't explain why I had been sent no letter of acknowledgement, or any letter telling me what my obligations are, what their decisions are, or what constitutes a change of circumstance, or why they are continuing to harass a single mother on benefit, suffering from depression, for money she clearly does not have. I think my blood pressure has gone up by about 20 points.

 

I am absolutely at my wit's end. They gave me a complaints address, but of course, it won't be dealt with by teh person who is now looking after the account, it will be dealt with by the call-taking department, and they will 'pass on' concerns if they feel they can't answer them. I told them I think it is completely inappropriate and unfair to keep me from speaking to the right dept, and that it is adding considerably to my stress, especially now it could be hanging over me for years. I also have legal obligations to close the company down, and I keep receiving letters from all departments of the HMRC and Companies House because the company still shows as live. I would also assume that it is earning interest all this time too.

 

Are they allowed to do this? It seems they are just blocking the strike off process and deliberately making themselves uncontactable. What do I do from here? I feel totally stuck, and I am so angry, I've done everything they asked me to.

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