Creditors Voluntary Liquidation

[tractor]

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In a situation like this isn't it worth the OP paying an accountant to redo his books properly to find what his situation is. He needs to fix his cockups but while doing this he might find his liabilities are considerably lower as ASB says?

I doubt an accountant would go near this without being paid in advance.

In any event, the liquidator should be rectifying any significant errors in the bookkeeping which will give a reasonable picture. The problem the OP faces is that they do not understand the first thing about UK accounting (probably about accounting period). English is a second language so there are likely to be misunderstandings.

IME, HMRC is ok and even quite helpful as long as you have not been purposely trying to defraud them (they may include negligence in this) and IME if you are going to get a kick, get near the boot to stop it swinging back so far . If this were me, I would be banging on HMRC door to help me. OP is going to be stuffed with a bill anyway. Might as well make sure the bill is correct.

[BrilloPad]

Many Many Thanks for your reply and it's much appreciated.

I have started my limited company on 2011. Every thing went well over 2 years. I have paid CT for 2011 and VAT's.

After that my father was ill in 2012 and it needs a lot of money for operation. I took around 70k and paid back full by taking dividends in 2013. After 2013 OCT trading was stopped as client was moved to US. In March 2014, I was due for CT 2012 and no funds in company account. But I have paid all VAT and CT was outstanding. I was expecting that business go well and then pay CT. But it was not the case and the business was dried and no cash flow at all.

I have approached liquidator based on friends suggestion and he suggested creditors voluntary liquidation. Then I went with that and my Ltd company made insolvent. After 14 months, he came to me and mentioned that HMRC have lodged claim for CT year 2012. In 2013, I have took dividends and paid directors loan instead of CT. Now my liquidator is asking for that confirmation.

This is where I stand now. I dont know what to say to my liquidator.

Can you give me your opinion on this? I am having sleepless nights on this and into more pressure on how to handle this. Can you please suggest me on what I can do?

I have explained every thing to liquidator before the process starts but now he is saying HMRC lodged cliam and asking why I have paid director loan instead of CT. I am more worried that I will be personally responsible for Corporation tax for 2012/2013 years.

I took dividends in Aug 2013/Sep2013 to pay my director loan and cleared. I took it as a preference over corporation tax. Because it's getting due. Corporation tax needs to pay in December 2013. But from October the business got dried and trading was stopped as the client moved from UK to US. Then company went to liquidation in March 2014 as no trading and no funds.

Tell the liquidator the truth. Nominally you are not responsible for the CT. The company is. But if the company does not pay it then you are in BIG trouble, based on your comments. Find out how much HMRC want in CT and see if you can pay it personally - hopefully they will accept the money and leave it at that.

[spec0203]

In that year, it would have been £5k.

Many Thanks for that info. Can you please elaborate more on this?

[spec0203]

Tell the liquidator the truth. Nominally you are not responsible for the CT. The company is. But if the company does not pay it then you are in BIG trouble, based on your comments. Find out how much HMRC want in CT and see if you can pay it personally - hopefully they will accept the money and leave it at that.

I have mentioned every thing to liquidator. He told me that HMRC lodged claim for CT 2012 year. I am not sure what this means? Is it mean HMRC asking for CT even the company is insolvent?

[BrilloPad]

I have mentioned every thing to liquidator. He told me that HMRC lodged claim for CT 2012 year. I am not sure what this means? Is it mean HMRC asking for CT even the company is insolvent?

Ask the liquidator how much HMRC are claiming. Then pay it. I expect HMRC will go away.

[spec0203]

Ask the liquidator how much HMRC are claiming. Then pay it. I expect HMRC will go away.

They are asking full CT amount for 2012 year and which is very high for me at the moment. I may need few more years to pay that.

[BrilloPad]

They are asking full CT amount for 2012 year and which is very high for me at the moment. I may need few more years to pay that.

If you can't pay it, then tell the liquidator that. You need to pay within 3 years. If not, you will need to go bankrupt.

[spec0203]

If you can't pay it, then tell the liquidator that. You need to pay within 3 years. If not, you will need to go bankrupt.

Cheers for your suggestions and its very much appreciated.

[TheFaQQer]

Many Thanks for that info. Can you please elaborate more on this?

Prior to April 2014, any loan made by the company to a director in excess of £5k needed to either be declared on the P11D or have interest charged at the HMRC dictated rate.

From April 2014, that loan limit changed from £5k to £10k.

So if your loan exceeded the £5k limit at any time in the year, by any amount, then you should have either charged interest or declared that loan on your P11D.

The one time I did it, I messed up and went over the £5k limit by a tiny amount and then had to charge myself interest on the whole loan (not just the bit over the £5k) to avoid P11D declarations.

[stek]

If you are a visa-national UKVI will cross check with HMRC to see if things tally.