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Alex J.
Alex J., Solicitor
Category: Bankruptcy Law
Satisfied Customers: 3653
Experience:  Bankruptcy, liquidations, administrations, pre pack sales, re use of company names and director duties and offences.
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there... I was a director of a ltd company years whilst

Customer Question

HI there... I was a director of a ltd company for 2 years whilst a business traded...i am the only remaining director at companies house..the company stopped trading in Dec 2013.i paid all the debts the company had ...there were no profits...no assett..the bank account was closed along with all other accounts...The VAT office contacted meat the companies registered address..which is my home to advise that there was a miscalculation and according to their calculation there was an outstanding balance of £11,500, i explained that the company had gone out of business...i tried to apply for the company to be dissolved at companies house and received a further letter this week advising the VAT bill was now 16k and accruing interest daily and that my application to de-register the company had been refused as the debt remained unpaid? I am in no position to pay this kind of money and dont know what to do? It was suggested to me to take the company bankruft but this also costs money ...please would you be able to advise legally what i can do about this as the letters are very worrying? I thought as a limited company there was no personal liability
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Are you a shareholder of the company?
Have you personally guaranteed the company's debts? Have you ever traded the company knowing it to be insolvent?
Kind regards
AJ
Customer: replied 2 years ago.

Hi AJ

We set up the company in order to purchase a Winebar... the landlord was insistent that a ltd company was in place in order to complete the transaction..i guess the original three listed as Directors must have been shareholders but we didnt every have any certificates or benefits from it? Does that help..

I have never personally guaranteed the company debts and no we stopped trading in Dec 2013...surrendered the lease and i personally paid any outstanding trades people from my own money.. so we never traded knowing the company was insolvent..

Amanda

Customer: replied 2 years ago.

Did you receive my response

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Under the Statute of Frauds 1677 you cannot be held liable for another persons debt unless you do so in writing. A company is a distinct legal entity and therefore you are not liable for its VAT bill on the face of it (with no personal guarantee).
The only possibility you have of being personally liable is if you accepted any payment or benefit of the company assets knowing it was insolvent. If the company goes insolvent (i.e into liquidation) then if you had benefited from the company assets (i.e dividend,excessive payments etc) the liquidator would investigate you.
You are right that putting the company into liquidation costs money and if you do not pay the VAT man they will probably end up doing it themselves.
What I suggest you do is the following:
- You do not need to put the company into liquidation, so be honest I would only think above saving yourself;
- The Insolvency Service accepts that the most effective defense against director liability and offences under the Insolvency Act 1986 is to take properly instructed professional advice (from an insolvency lawyer) and then follow it;
- What I would do in your circumstance is go and get a solicitor to write to HMRC and say the (i) The company stopped trading 18 months ago (ii) it has no assets - say you cannot assist them any further. If you are not a shareholder of the company I would look into resigning;
- I would note if the company is put into liquidation by HMRC you will have to co operate with the liquidator and fill in a questionnaire. The liquidator will have some sympathy as HMRC miscalculated what the company owed.
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 years ago.

HI there

So just to confirm..i need to get advise from a solicitor who specialises in insolvency issues?

Is that right?

Expert:  Alex J. replied 2 years ago.
Hi
Thank you.
Yes - if you contact the www.Lawsociety.org.uk they can recommend someone near to you.
You need to protect yourself and not the company - if you are ever dragged to court as a director of the company and ordered to explain your actions - if you say you actions were advised by competent professional advice then you can use this as a defence, in the event that they try and attach personal liability to you.
At this stage you are not facing personal liability but you will need to assist any liquidator if HMRC push to petition for the liquidation of the company.
Kind regards
AJ

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