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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I am self employed owing HMRC £32, 000 for the last financial

Customer Question

I am self employed owing HMRC £32, 000 for the last financial year 2012/13 and I just called them today to plead for installmental payments which I promised to pay back full amount within 8months but I was refused based on the fact that my company loaned a director £24,000 which is yet to be paid back but I assured them the director is making effort to pay Back the loan within the next 3months

I told them my company is not able to pay the cooperation tax( £32,000) now because of the reduced number of working hours and some financial problems experienced . I have paid my cooperation tax by installmental payment in the past which I did not default

Please what do I do now?? Because I was informed that legal action would commence soonest
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

Can we please clarify the position.

Do you personally owe HMRC 32K or does the company owe them? It looks to me as if it were the latter, but I would appreciate a clarification before I can frame an answer.
Customer: replied 2 years ago.
It is the company that owes it ( cooperation tax) but am a director in the company

Awaiting your response
Thanks
Expert:  bigduckontax replied 2 years ago.
Please remember that the company, it's directors and shareholders are separate legal people. What the company owes has nothing to do with your indebtedness.

What I suggest that you do now is merely to write back to HMRC and tell them that there are insufficient funds at this stage and to arrange a more realistic schedule. This may escalate the problem to a higher level in the tax office and receive a more realistic hearing.

If they do proceed against the company to recover the debt then appear at the hearing to put the company's difficulty to the presiding judge. This may result in HMRC having to accept a realistic schedule of payment.

If the company is put into receivership as a result of this debt, will it benefit HMRC or seriously affect you? That I cannot tell without more detail. There remains one danger, have you paid other debts owed by the company? These creditors should have been paid parri passu with HMRC ie in proportion. If you have then a fraudulent preference will have been created and you will require independent legal advice.

That loan to a director is going to cause problems. I trust it has been properly annotated in the company's accounts. Also, is its repayment secure? If it is not your organisation may be in serious trouble.

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