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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5028
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi, I was a Director of a Limited company from July 2013 to

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Hi, I was a Director of a Limited company from July 2013 to earlier this month. I never had access to a company bank account or any cash flow statements. There was one other Director who is also the MD and despite my repeated requests for information and a bank account I could access, none was forthcoming.

I wasn't able to deal with the company accountant and had no final decision on the hiring and firing of staff.

In November last year I urged the MD not to appoint an extra staff member as it was coming up to a quieter time of year. He appointed them anyway.

At the end of December I was told there was an HMRC backlog with PAYE and NI contributions but never an exact amount.

I immediately urged the MD to make at least 2 but possibly 3 staff members redundant. He reluctantly make 1 person redundant at the end of January but nobody else.

I've not had all my pay from December and nothing at all from January. I resigned as a Director on 10th February as the MD repeatedly ignored my requests for meetings or for him to arrange a payment plan with HMRC. Since resigning I have discovered he's not done the last 2 VAT returns that were due either.

The company is still trading but my worry is it may not be for much longer as he's not got in touch with HMRC as I asked him to do repeatedly. I would have done this myself when I was a Director but I wasn't privvy to the necessary information and didn't have any authority to set up a direct debit.

My main question is that given all this information, were the company to be liquidated by HMRC, how likely is it I could be found in any way responsible for what was owed?

I have emails to back up my requests for redundancies and to contact HMRC.

Thanks and sorry for the long email!
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.

Hello and welcome to the site. Thank you for your question.

You were a director of the company for a period of 7 months and resigned in Feb 2014.
You appear to have done all the right things, namely:
- drawing other directors' attention to outstanding issues with HMRC
- concerned about company's financial health
- urging other directors not to engage additional staff because of poor financial being of the company
- retained copies of important and relevant correspondence.

Based on what you have stated, I can't see any grounds for HMRC to hold you responsible for what is owed to HMRC and/or other creditors. If the other directors knowingly keep on trading when the company may be technically insolvent, then they may be personally resonsible for any debt owed to HMRC.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

Thanks so much for your answer. The other thing I didn't mention was that I was supposed to be a shareholder as per the agreement when I joined the company but this was missed by the accountant at the annual return so I was never officially a shareholder.


 


Therefore I was a Director but with no say in any matters as the MD had the majority shareholding and a friend and a relative of his were the other two.


 


Also, because I haven't had all my pay for December and none at all from January, I am due a payment at the end of this month. Is that okay to accept? I obviously need the money after receiving none for over a month but am concerned it may come back to haunt me if the company is later found to be trading unlawfully - or does that not matter now I'm no longer a Director?


 


The company has a lot of work in the pipeline and can probably realistically trade out of the debt within a year at most but my concern is that the MD is still doing nothing about it and sooner or later this will catch up with him.


 


Is it right that HMRC generally give a 12 month period maximum for repayments of VAT, PAYE/NI?


 


Thanks


 


Jamie


 


 

Expert:  taxadvisor.uk replied 3 years ago.

Jamie, thank you for your prompt reply..

 

Shareholding should not matter when conducting board meetings and making management decisions as these are done as directors.


[q]

Also, because I haven't had all my pay for December and none at all from January, I am due a payment at the end of this month. Is that okay to accept? I obviously need the money after receiving none for over a month but am concerned it may come back to haunt me if the company is later found to be trading unlawfully - or does that not matter now I'm no longer a Director?


[a]
You shoull accept the salary owed to you for the period you worked there .. it is rightfully yours. It should come back to haunt you.

[q]
Is it right that HMRC generally give a 12 month period maximum for repayments of VAT, PAYE/NI?

[a]
HMRC could agree a payment plan longer than 12 months but it has got to be credible.


I hope this is helpful and answers your question.

Customer: replied 3 years ago.

Sorry, did you mean to say "it shouldn't come back to haunt you" rather than "it should"?

Expert:  taxadvisor.uk replied 3 years ago.
Jamie, my apologies if I missed the word NOT..

It should not come back to haunt you.

I hope this is helpful and answers your question.
Customer: replied 3 years ago.

Yes, thanks so much for all your help.

Expert:  taxadvisor.uk replied 3 years ago.

Thank you for your kind words.


I hope this is helpful and answers your question.


If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.

 

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 3 years ago.
I thank you for accepting my answer.

Best wishes.