Strike Off/Bad Accountancy Advice

[parky22]

Hi all

 

Sorry if this is in the wrong place, but I have recently spoken to Business Debtline and I have taken their advice but still remain terrified.

 

I had a company as a contractor, but a relative acted as director (as I was unable to be one having been made bankrupt and unable to open a business bank account). This was done as the accountants advised it, and BD told me this was awful advice.

 

Anyway, my company has no money so I am applying for Strike off in Oct (I ceased trading last month). I am just about to send letters to HMRC, the accountant and the bank. I owe about £600 VAT but about £5000 CT. As a company BD think HMRC are unlikely to object, but of course there are no guarantees and I have read a thread on here from someone who was in a similar position to me and HMRC DID object.

 

For info, my annual return has been submitted (it's possible they may know how much CT I owe) and my accountant are about to submit my VAT return - should I try to stop them?

 

Anyway, I need to protect my relative, if HMRC object to the strike off then will I have an option to pay (heaven knows how I'll do it but if it comes to it then I will find a way as my relative must not be affected by this). There is no money left as I overdrew dividends, with the intention to pay them back later this year but then I lost my contract and wages of £600 per week with it. £5k was not so much to be thinking to re-pay but now I am earning £45 per week (less than JSA!) and it's not possible to put funds back in to close the company down.

 

I am so scared, I wake in the night and haven't slept all night for ages. I am increasingly drinking alcohol to try and forget, and am worried about where this will all end

 

Please help with any advice - I know there may be people on here who deal with this every day

[toddle2u]

Parky

Your situation is a common one and please do not try to worry too much about it - it's not a hanging offence and your situation is the same as 1000's up and down the country. I would submit the DS01 asap and see what happens. The company cannot pay the CT debt and it is the company debt not yours. The problem is the o/d DLA. If HMRC don't object to the strike off you are in the clear as the debt dies with the company. However, the problem is if they do and they issue a winding up petition and the OR deals with the investigation. They will want the o/d DLA paid back but even then you can do a deal with them to pay over time. The other problem is that it is your relative that will have to attend the interview with the OR. If you are a discharged BR can you now not appoint yourself as a Director and resign your relative? They will still have to complete a Directors questionnaire from the OR but will not have to attend the interview. You were given bad advice by your accountant as acting as a shadow director whilst BR is a serious offence and if it is proven that this is what was happening you could be held persoanlly liable for the companies debts - but you are a long way off from that yet.

I would not submit the VAT return as I guess you are getting the accountant to do it and he will want paying for it and you are therefore incurring further debt for the company.

Get the DS01 in to CH quickly and get the ball rolling and see what happens with HMRC. Make sure a copy of the DS01 goes to all creditors with a covering letter saying that the company is insolvent and ask them to issue winding up proceedings. The chances are they will not because of the small sums involved but at least you have given them the chance to and if HMRC do object to the strike off you can send a copy of the covering letter to CH showing that you notified them of your intention to apply for a strike off.

If you need any more advcie just shout

[debtinfo]

what was the relative doing, were they acting as a shadow director, or were they in control of the company, what work did they do, were they fit to be a company director

 

btw if they were acting as a shadow director they as well as you could be made liable for the debts

[parky22]

My relative had no say in the company whatsoever - it was just a name to put down and they set up a bank account for me. I was in control, and the intention was that in Nov 2010 when I was discharged, I would take over but I never changed it over (wish I had). I can't submit DS01 until 14th Oct this year as was still trading until 14th July. Now I'm thinking it would be foolish to take over the company as I have previously closed a company down when I went BR so if they see my name again I think it would look a bit worse.

It's the whole interview with the OR I must avoid for my relative at all costs - if they inform me they are going to start wind-up proceedings can I stop there and agree to pay everything back (not sure how I could do it but I would find a way)? Or if they start then would my relative be obliged to attend even if I do say I'll pay all liablilities?

I've paid my accountant £180 per month (stupid money) since Aug 2010, I missed the July payment and for August it reduces to £60 as a dormant company. They are doing the work anyway and I said I may agree to pay the final amount I owe them, but BD advised me not to. They are doing the VAT return anyway - as I've paid so much!

I don't know why I took the advice of the agency and the accountant, I should have just worked umbrella until I was discharged, and now I regret every action. I'm still not sleeping

[parky22]

Oh, thanks by the way for replying - I forgot to say that first! Also, what is DLA?

[parky22]

P.S I am starting saving my children's child benefit to ease my mind that I will have something to pay in should the need come - the VAT is due end of August and CT due May 2012. I need to get my letter to HMRC asap or else they'll be fining me for not paying VAT

 

HMRC and my accountant are my only creditors - Bank account £0 not overdrawn, owe accountant £240 and HMRC VAT £600 (roughly) and CT I think £5000 max. It's only on the CT side of things they are entitled to issue win-up proceedings I assume? (BD said debt to creditor has to be over £750 is that right?)

[toddle2u]

Parky

DLA is Directors Loan Account. Yes it is correct that they can only issue winding up proceedings for a debt over £750. You must remember to seperate your debts from the companys - you do not owe HMRC anything the company does.

If HMRC do issue winding up proceedings and it goes to the OR then if your relative is still the Director he will have to attend interview. It does not matter that you previoulsy closed down a company these things happen. Personally I would resign your relative and appoint yourself to avoid your relative having to attend an interview with the OR IF things get that far.

 

At this point in time the only things you need to concern yourself with is getting your relative off the company and getting the DS01 filed when you can. The company has no cash or assets so cannot pay its liabilities - you do not have to pay these personally. Any creditor who contacts you should be told this and invite them to wind the company up. If the strike off goes through you are in the clear. If HMRC object and they wind it up all you then need be concerned about is the o/d DLA. How much is that for? Even then you can do a deal with the OR.

 

if they inform me they are going to start wind-up proceedings can I stop there and agree to pay everything back

Yes you can even at that late stage. I have literally just got off the phone to HMRC for a client who owes them a six figure sum and they have agreed to be repaid over 2 years and HMRC have a county court judgment against them so it can be done. However, the strike off is your best (and cheapest) route. I tend to also agree with BD that I do not think HMRC will go for a winder for such a relatively small sum.

 

 

Action Plan - Protect your relative and yourself (as much as you can at this stage) from allegations of being a shadow director and resign them and appoint yourself. Apply for strike off and send copies to creditors (when you can). Tell any creditors who contact you that company has ceased to trade and has no assets. Do not file any other forms apart from DS01 at CH. Don't bother sending VAT return in. Do not pay the accountant anything further.

[parky22]

Ah I see, well I suppose the value of the DLA would be the same as the CT owed, about £5k - I basically overpaid dividends to myself which I intended to replace before May next year. I don't know if it is formally recorded as a DLA anywhere? BTW, as my Mum was director, no salary was ever drawn over the year the company traded. Does this make any difference? All fiunds were drawn as dividends, bar the VAT I have paid over the year.

 

Are you confident that seeing me taking over as director after the company ceased trading, and also given that I have had a previous company struck off won't make HMRC automatically start wind-up/investigations?

 

Sorry I'm so scared.

 

Reassuring that you can pull the plug and come to arrangements if it came to it though

 

Oh, and when you say just do DS01 would that suggest I don't write to creditors immediately as I planned to do, or should I still write to HMRC as BD advised?

 

Thanks again

[toddle2u]

Ok the dividens should be converted/restated to salary whcih will wipe out the DLA and mean that you do not owe the company money. This will increase the COMPANIES liability to HMRC not yours. Get you accountant to do this if need be it is a very simple procedure. So if the company is wound up and it goes to the OR there will be nothing for him to chase you personally for.

 

Are you confident that seeing me taking over as director after the company ceased trading, and also given that I have had a previous company struck off won't make HMRC automatically start wind-up/investigations?

 

You can never give 100% guarantees on anything when dealing with HMRC but it will mean your mother will not have to attend an interview if the company goes into liquidation. All she would have to fill in is a Directors Questionnaire but as said previoulsy you are a long way from that anyway at the moment.

 

Oh, and when you say just do DS01 would that suggest I don't write to creditors immediately as I planned to do, or should I still write to HMRC as BD advised?

 

No to fulfl your legal obligations you need to still write to creditors and include a copy of the DS01

 

It's good news about no salary being taken because now if the strike off goes through your in the clear and also if HMRC wind the company up you owe the OR nothing personally so it's a win win situation whichever way it goes. Just get your mother off the company as a Director asap. Even IF the OR did investigate your actions (which I do not beleive they would for one moment) all you would get is a Diretcors ban for 2 years and you can still operate as a sole trader in that time anyway. But as said cannot see that happening over these small amounts

[parky22]

Right then, I sent the form to take my mum off and make me director today - I used the date of 01.06.11 so I hope that will be OK with them. Next step is to write out to inform of striking offf in Oct. Will I be told that they have made me director once it has been done?

Thanks

[toddle2u]

Ok great. No they wont inform you but you can check for fre on the webcheck service on the CH website. You need to click on the 'orderinformation on this company' section once you have found the company. Thsi will tell you of any changes. Keep us posted

[parky22]

Will do, I'm still keeping fingers crossed too. When you say I still have to send a letter to every creditor with the DS01 - am I sending a copy of a post-dated DS01? As I can't file for strike off until 14th Oct, I was just going to send a letter to each creditor (HMRC and my accountant).

 

And will it be OK to send these letters out say, next week? It may take CH longer than that to put me down as director?

 

Thanks for all your help

[toddle2u]

I would first send the letter stating ceased trading, insolvent etc as mentioned earlier and invite them to wind company up and then in Oct send a copy of the DS01 to them. Pointless really sending a post dated one. Was 14 July the actual date you ceased carrying out any contract work or when you last invoiced? Ceased trading is when you actually last did some contract work

[parky22]

Hi sorry I haven't been on for a few days. The last day I actually worked on a contract was 14th July, so I'm sending DS01 off on the 14th Oct. I have letters drafted to sign now, am just waiting for a few days before I send it off otherwise if they haven't changed us over as directors then they may wonder why signed by me?

[toddle2u]

Ok keep us posted

[parky22]

Just a small update, I have now been appointed as director and my relative has bee taken off. I hope now if they don't allow the strike off and they do investigate that it will be me they check out. And fingers crossed I chose the right HMRC address of the many they have!

[toddle2u]

This the address for HMRC Vat - HMRC (Vat) Debt Management, 1st Floor, Queens Dock, Liverpool, L74 4AG

 

For the Corp Tax you should send letter to your local office that you will have been notified of.

 

Keep us posted

[parky22]

This the address for HMRC Vat - HMRC (Vat) Debt Management, 1st Floor, Queens Dock, Liverpool, L74 4AG

 

For the Corp Tax you should send letter to your local office that you will have been notified of.

 

Keep us posted

 

Ooops looks like I sent the letter to the wrong place, I sent it to the written enquiries section in Southend, Essex.

I am not sure who my tax office is, and I'll bet my accountants won't be forthcoming......I'll update again soon