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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I am a 49% shareholder in a small LTD co. The other 49% shareholder

Customer Question

I am a 49% shareholder in a small LTD co. The other 49% shareholder is also the sole director. There are 2, 1% shareholders which are our wives. The director has made a few neglectful mistakes which has cost the company dearly and unfortunately the company may fall flat. My question to you is this; The accounts are being finalised in October of this year. As shareholders, we have both received dividend payments. Now, if the company cannot afford to pay the corporation tax due in October, who is liable? Does the buck stop at the Limited company and HMRC will either set up a payment plan or wind the company up, or can HMRC come to me as a non shareholding director 'personally' for any corporation tax due on dividend payments?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to assist you with your question. There has been a fraudulent preference here, a criminal offence. By distributing dividends when moneys were due to HMRC at the expense of that Department is quite improper. The quick solution is for the shareholders to return the moneys to enable the tax bill to be met. The shareholders can also call an Extraordinary General Meeting and pass a resolution to remove the director. They can then try a civil action to recover moneys lost through neglect. HMRC could be requested to agree a repayment plan, but quite frankly that Department will adopt the not unreasonable view that as the company had the funds why can the bill not be met? I have a slight difficulty with your question though. You start by saying that you are a 49&% shareholder and end by saying you are a non-shareholding director. A bit of a discrepancy there! No doubt you will be back with a follow up question.
Customer: replied 1 year ago.

Sorry, this was a mistake. I am a shareholder, but not a director. My colleague is the other shareholder and is also the sole director.

Expert:  bigduckontax replied 1 year ago.
It's always a pest, isn't it when things like this go awry.
The best solution is probably for everyone to repay in appropriate amounts from their dividends enough to clear the HMRC bill and let it be. There's no use crying over spilled milk.
In the end you could even sell the company off om eBay!
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3102
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.
Customer: replied 1 year ago.

Hi

My questions follows a brief history;

I have been a 50% shareholder to a business that has a sole director who is the other 50% shareholder. I have been in this position for approx 4 years and enjoyed dividends.

2 years ago I was registered with HMRC for earnings at the lower level at the said ltd company, thus paying the minimum in taxation due to the limitations for paye. My question; is the company responsible for statutory holiday/ redundancy and general employment law for my employed paye benefit? I have no contract

Expert:  bigduckontax replied 1 year ago.
Yes it is. There is another infringement here. As an employee you are entitled to receive a contract of employment within, if I recall, six weeks of being engaged.

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