Income tax and BR

1bigmess

Hi all, just a quick query re income tax and if outstanding amounts are covered in BR?

I had a ltd company which ceased trading in August this year. I am about to sort out my personal tax return for the period from April 07. I went BR in September this year. If I do owe anything, will this amount be covered in my BR or will I still have to pay it?

Many thanks

Richard_S

Hi 1bigmess,

Any tax due up to the date of your Bankruptcy Order will be included. If you still have self employed income after that date you will be liable for that, but it'll be paid to the O.R and not HMRC.

Regards

Richard

maxmycardagain

Corporation tax (for the ltd company) is a separate issue from personal income tax, and isnt included in BR, whereas your personal (paye) tax will be - though as a deduction from your wages it too should be part of your ltd companies affairs.

If organised properly there wont be any tax due, your ltd company must be insolvent/no profit=no tax and as an employee of it you should have only been paying yourself £100=no tax...

maxmycardagain

Richard_S wrote: »

Hi 1bigmess,

Any tax due up to the date of your Bankruptcy Order will be included. If you still have self employed income after that date you will be liable for that, but it'll be paid to the O.R and not HMRC.

Regards

Richard

he isnt/wasnt self employed though, he was a director of his own ltd company, its very different from being self employed.

1bigmess

Thanks for the replies.

I understand that my personal tax is a seperate issue from corporation tax. I think I made a mistake in the early days re paying myself wages and topping up with dividends so think I may be liable for some income tax, but if it is covered in BR it won't cause too many problems.

I now just need to finally put the LTD company to rest.....Does anyone have any knowledge here?? It owes around £5500 in an overdraft and £125 to BT for early cancellation of a contract. Company has no assets and no cash and so on professional advice I applied to have it struck off rather than go through other routes. I keep getting threatening letters from the bank who have just issued a final demand. I have told them that they can obviously see the company has no money, that it has no assets because it was operated from home and that in a matter of weeks it will no longer exist. If they keep pushing, ultimately what will happen? I undertstand that if I had put the company into liquidation it would have cost me £5000. The reason I was advised not to is because the company literally has nothing to give. If the creditors push for formal proceedings, do they foot the bill? Would they really go this far knowing they'll get nothing back???

Sorry to waffle, but need this sorting before I am finally free of this mess:mad:

Richard_S

maxmycardagain wrote: »

he isnt/wasnt self employed though, he was a director of his own ltd company, its very different from being self employed.

Hi Max,

I realise that, but 1bigmess did suspect s/he could have a liability for personal tax, whether that was P11D's or some other benefit in kind wasn't clear, and quite often people who trade through a Ltd Co up to declaring bankruptcy, continue to trade as a sole trader / partnership afterwards.

My knowledge of taxation is a little out of date but I did come consistently in the top 3 in the class when I was training as a chartered accountant, so the basics are still there.:D

Regards

Rich

Richard_S

Hi 1bigmess,

It's very unlikely the bank will pay for the comapny to be liquidated, but they may well resist you having the company struck off and ultimately dissolved. You need the agreement of all creditors to successfully have a Ltd Co struck off.

This could be one of those things that doesn't happen overnight, and once you've been declared bankrupt you can't act on the Co's behalf anyway.

Speaking to the bank is worth a go, and explaining that you intend to declare personal bankruptcy but you'd like to tidy the Ltd Co's affairs before you do, and see what they say.

Richard

maxmycardagain

If the OP resigns as a director of the company at companies house, his liability for company debts fails, especially as he intends to go BR

after 2 years of no accounts company house will dissolve it anyway

speaking to the bank could see all business and personal accounts frozen, ive seen it happen to one guy who only had time to get home after seeing his bank manager to check online! frozen!