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bigduckontax
bigduckontax, Accountant
Category: Tax
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Small Ltd business, 2 directors (shareholders) in second

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Small Ltd business, 2 directors (shareholders) in second year of trading - been winding company down for various reasons. Not traded since December. Found out yesterday (6/6/16) business partner resigned as a Director on 9/1/16 which has been a shock. Called Companies House and HMRC and no one can advise what the consequences are of this action. Does that mean that she is relinquished of the companies Corporation Tax for 2015-16 (the outstanding corporation tax for the period) is for when she was employed. She has had over £12k worth of training that has gone through the company + a Macbook Pro computer - surely she owes the company? Can you advise?
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 help you with your question.

Firstly advise Companies House of her cessation as a director on a Form TM01, you can obtain a blank from Companies House.

Directors are not normally liable for the Corporation Tax (CT) assessments against the Company; it is the company which has the liability not the directors or the shareholders.

The fact that she received 12K worth of training was presumably approved by the directors. Unless she signed a waiver requiring reimbursement to the company within a set period after the end of the training then any recovery action will almost certainly fail. If she has company equipment, you indicate that she has a computer, then that remains the property of the company and she must return it. However, the costs of recovery will probably outweigh its value should she decline to co-operate. .

These sort of things occur with regrettable frequency unfortunately. I am so sorry to have to rain on your parade.

Customer: replied 1 year ago.
should I resign also?... Then I'm not liable to pay the corporation tax either! That does not make sense to me? I should have resigned, and withdrawn all my dividends before we had a £25k corporation tax bill to pay in January ;-) Surely as equal shareholders (which I believe she still is, despite her Director resignation) we are both responsible?
This tax bill will be small - approximately £2.5k but given there is not enough money in the business because we have over-drawn funds - I believe both of us are responsible to ensure that there is enough money to cover the corporation tax in January?
Expert:  bigduckontax replied 1 year ago.

Directors rarely and shareholders never; they are not responsible for a company's CT bills. However, if the company has committed a fraudulent preference ie paying creditors at the expense of another then directors may be held liable for the infringement. Drawing dividends if CT was due and the company insufficient funds is a classic example of a fraudulent preference.

You say that there is not sufficient funds in the business to meet the CT bill then you will either have to negotiate with HMRC to arrange an acceptable repayment schedule or possibly loan the company sufficient funds to meet the bill. However, if directors are aware of an inability to meet current creditors they have a legal duty to call in a receiver to have the company wound up.

bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.

Thank you for your support.

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