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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I was the sole director of a limited company until the

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Hi there, I was the sole director of a limited company until the contract I was working on came to an end in December last year. Due to money already taken out the company for salary and dividends, there is nothing left to pay a VAT bill (£600), and 2 corporation tax bills (6k and 2k). I have tried to wind the company up but HMRC have objected due to these outstanding tax bills. They are chasing the bills up and passing them to debt collectors now. The company has no money and no assets. Where do me and my company stand? Can I be held personally liable for any of this debt? Or will HMRC eventually write it off as the Ltd company in question has no money or assets and has ceased trading. Thank you.
Submitted: 9 months ago.
Category: Tax
Expert:  taxadvisor.uk replied 9 months ago.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.

Customer: replied 9 months ago.
Should have noted this is based in Scotland.
Expert:  taxadvisor.uk replied 9 months ago.

Thank you for your question.

In normal circumstances the LTD company's debts are treated/viewed separately, the LTD company being a separate legal entry.

If HMRC suspect the actions of the directors' were delibrate, then they have the power to pursue the directors for the debts.

In all honestly, you should have made provision for VAT and CT liability before withdrawing the funds.

If I were you I would make an effort to clear HMRC debt and/or make an arrangement for negotiated setllement.

There is every likelihood, the debts would be written off but you may have to wait for a few years as HMRC would keep objecting to the company been struck off with monies owed to the Exchequer.

I hope this is helpful and answers your question.

If you have any other questions,please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 9 months ago.
Hi thanks for your response. Do HMRC care where the funds come from to pay the tax? If I now pay these bills from personal money, will they be likely to notice and think I have previously mismanaged the situation?Another issue is if I ever want to start another Ltd company would my name be somehow blacklisted?
Expert:  taxadvisor.uk replied 9 months ago.

Thank you for your response.

If you are paying the bills from personal money, HMRC is unlikely to question the mismanagement of company finances as the debt would be cleared.

I presume you would be making payment from personal funds that is disposable income in your hands or savings from declared and taxed income.

If you were to clear your debt, the creditors would not have any objection in the company been struck off. Your name would not be blacklisted and you would be able to incorporate another company be be its director/shareholder.

I hope this is helpful and answers your question.

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