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bigduckontax
bigduckontax, Accountant
Category: Tax
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Problems of an Independant Consultant (Limited company)

Customer Question

Problems of an Independant Consultant (Limited company)
1.Poor service, zero tax advice from last accountant (2010-2015) - resigned late 2015
2.Late submission for 2014 year end accounts due by May 2015
3.Late submission for 2015 year end accounts due by May 2016
4.Late submission for self assessment due to the above
5.Late for VAT return/PAYE NIC since June 2015
I am the sole employee/director/share holder (on the book) of a limited company which i used to provide professional services. But when the business first started in 2009, it has traded in various industries and involves shareholders & 'persons with significant control' who are not on the book. The resignation of accountants has eventually leads to fines build-up, my performance in consultancy services going downhill , lost of earning, break down of marriage and the right to keep my daughter.
Potential solutions:
A.Resign Directorship but remain as shareholder who holds 50%. Give the remaining 50% to 'persons with significant control' who are not on the book.
B.Appoint another director to sort out the outstanding issues.
C.Open a new LTD company for myself and only do consulting services to survive.
Need: Practical advice to the scenario described above which put professional knowledge above other values, including ethics.
Many thanks. You may save a life.
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.

No need to resort to suicide at this stage, just a lot of work to be done. I assume that you cannot undertake these administrative matters yourself.

A. I would suggest that you only give 49% of the shares away leaving you with 51%; always a good idea, keeps you in control and remain as a director.

B. Why bother to appoint another director? Why not use a trusted local professional to cover these tasks? You will, of course have to pay them and, of course, the penalties. If you approach the organisations concerned and explain that you are sorting the mess out they may be lenient and reduce or even cancel the penalties. I know of a case where tentative agreement has been reached to file an old account, the treatment of which is in dispute, and cancel the penalties imposed.

C. Why bother, just use the existing company.

I do hope that you find my response of assistance. My advice is entirely ethical to boot! If you have further queries on what I have suggested please do not hesitate to follow up on this thread.

Customer: replied 1 year ago.
Hi, please see my comments below:A.The reason for 50% allocation is so that i can stop thinking about this mess and start a new company doing my own business only. Moreover, this can let the rest of the shareholders having the right to decide whatever they want to do and it has nothing to do with me? Also, please refer attached share registrar, only 1 share have been created when the ltd company was formed. Am i still able to issue 49/50% type of share now?
B.The biggest financial problem is the lost of my income from independent consultancy and i cant afford to be struck off from the directorship when i am in the middle of providing professional services to client using the current Ltd company. The effect will be disastrous, cost £millions and may trigger further complications in terms of self-employed taxation issues, IR35, professional indemnity insurance....etc.
C.I cant issue dividends when the company is not making profit hence there will be no advantage for me to continue using the current LTD company to trade.Many thanks for your time and efforts in this matter, but please note that the questions are very UK specific. I look forward to hearing open and honest opinions from you.
Expert:  bigduckontax replied 1 year ago.

A. Assuming the Company Articles allow it and you have spare shares available, most ready made companies have a capital of 1000 shares, then the company can, but a special general meeting will be required and minuted in the register. As there is only one shareholder this is a rubber stamp exercise.

B. If you retain the current company there is no problem here. If you are going to do future business with a new company then simply novate ie transfer the activity with your current customer explaining that a newly formed company is being used, but business practice is unchanged.

C. Dividends can only be declared from 'free' cash. As these are grossed up for tax in the hands of the recipient, after the first 5K tax free, you may be better off using wages as the NI deductions will keep your card stamped to use an old expression. If you use the existing company you can mop up the losses and reduce taxation.

My reply has always assumed that we are dealing with an UK organisation.

Please be so kind as to rate me before you leave the Just Answer site. You can still follow up after rating.

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Expert:  bigduckontax replied 1 year ago.

Thank you for your support.

Customer: replied 1 year ago.
Many thanks for the advice and lastly, based on my circumstances:
1.In your view and based on the above, what type of accountants shall i engaged for both the existing and new ltd companies? i.e. online accountant with free software vs traditional local accountant firms vs traditional non-local accountants with expert knowledge in this field.
2.Although i still do not intend to bring my previous accountant to court, but what could have been done to prevent this ever happening again?
Expert:  bigduckontax replied 1 year ago.

1. For convenience a traditional local accountant, then you can keep a beady eye on things.

2. Report his antics to his professional association, if he has one. Unfortunately anyone can call themselves an accountant and set up in practice whether qualified or not. If you call yourself a solicitor. for example, and you are not admitted then you commit a criminal offence.