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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 6812
Experience:  FCCA FCMA CGMA ACIS
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I have a small business and have an issue with VAT tax

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I have a small business and have an issue with VAT tax owing.
JA: Where are you? It matters because laws vary by location.
Customer: London, UK
JA: What steps have you taken so far?
Customer: I have been asked by HMRC to view my accounts. I know that I will owe VAT and I want to know my options. It is for a limited company.
JA: Anything else you want the lawyer to know before I connect you?
Customer: I am considering the option of closing the business and opening a new company as I expect it will be impossible to pay the potential VAT owing.

Hi, I am one of the experts. I will come back to you little late, plz bear with me.

Still you need to pay outstanding VAT.

I opt out and maybe one of the other experts help you on this subject.

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

I assume that the company's turnover in any 12 months exceeded the threshold of 85K, Please confirm.

Customer: replied 6 days ago.
over 85k

Then you must register the company for the tax, calculate it and make returns online to HMRC. If there are insufficient funds then HMRC may well liquidate the company anyway. If payments have been made by the company whilst debts ie VAT are owed, but not paid, this will constitute a fraudulent preference, a criminal offence. As a result, you could find yourself disqualified as a company director for a period. To put it bluntly, you could be in serious trouble.

Whilst your proposal is attractive on the face of it, it could prove to be an unrealistic enterprise.

Customer: replied 6 days ago.
If I cannot pay the tax will HMRC wind up the company anyway?
Customer: replied 6 days ago.
If I open another company but stay compliant will they close that company?

Almost certainly they will seek to wind up the existing company and report the fraudulent preference. That Department will treat the whole caper as tax evasion, another criminal offence.

Customer: replied 6 days ago.
If I try to pay but cannot within required time what will be the likely outcome
Customer: replied 6 days ago.
Are my options only poverty? I have no assets.

You can try to negotiate with HMRC to arrange a repayment schedule you can afford and that that Department will accept.

Customer: replied 6 days ago.
If I know I cannot pay and still operate this is also a breach correct? Can I open a new business (with full compliant books) and try to pay off the old company debt? To avoid an ongoing mess?

You can try, it all depends upon the creditor, HMRC.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 6812
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you

Thank you for your support.