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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4082
Experience:  FCCA FCMA CGMA ACIS
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I hope someone can help. Last year my brother was due to be

Resolved Question:

Hi, I hope someone can help. Last year my brother was due to be made personally and asked me to become a director of a company he ran as he had resigned as a director due to his bankruptcy. I agreed and to my knowledge I became a director in October 2015. Subsequent checks have shown that according to Companies House I became a director when the company was formed on 4th Sept 2014 alongside my brother who it transpires resigned as a director on 27.1.15 so from that date I became the only director (although I was unaware of the company at this point. A branch manager was appointed in August 15 to run the Company which has 6 employees. There was NO financial system in place. I have spent months just collating invoices and trying to reconcile receipts and bank transfers. There is a descrepancy of 103k that cannot be attributed to the business - basically my brother used the company as his personal piggy bank.i have cleared all the company's debts with suppliers etc and we have orders on the books totalling over 250k - we design and supply kitchens and bathrooms. In the last week I have discovered that although the staff have all been paid properly there has been no PAYE or NI paid to HMRC. My question is can I foem a totally new company which would honour all existing contracts and bookings and run a new company starting from scratch. I'm told that I could wait for HMRC start winding up proceedings at some point. No accounts have been filed for the company and I very much doubt VAT has ever been paid. I know it's a nightmare. The business is viable if it is run properly. I know I could go into voluntary liquidation but that would mean putting all the staff out of work and leaving all the customers who have paid deposits without the product they have part paid for. Please advise what I can do legally. Many thanks
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.

I am of the opinion that to form a new company, I would suggest with no involvement of your brother, to undertake all existing business commitments is the way forward. You should advise The Registrar of Companies of the discrepancies you have discovered regarding your directorship on formation until your real appointment in October 2015. Then let HMRC take what action they deem appropriate regarding the original company in which you have had no managerial input until October 2015.

I do hope that you have found my reply of assistance..

Customer: replied 1 year ago.
Thank you Keith. So to open and register a new limited company and taken on all current business commitments is acceptable and legal. Can you advise my obligations regarding the company that will cease trading? Am I personally liable for the hmrc debt incurred and is it ok to transfer all staff and assets - kitchen and bathroom displays to the new company. Do I need to inform hmrc or companies house that the original company has ceased trading? I look forward to hearing from you. Sally
Expert:  bigduckontax replied 1 year ago.

It appears the best solution to an unfortunate situation. As a limited company is a separate legal entity to its shareholders and directors it is the company which is liable for the debts incurred not the individual.

Be careful not to remove cash or items with a resale value without compensation as this would constitute a fraudulent preference if HMRC were left short and a fraudulent preference is a criminal offence. Having said that I am aware of a company which had a large stock of parts for old buses which the receiver declared valueless so the directors removed them with permission. They were actually worth many thousands of pounds!

I am of the opinion that you should take trusted, local professional advice before embarking on such a project.

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Expert:  bigduckontax replied 1 year ago.

Thank you for your support.