vat problem

tekfly

Hello folks

Im after advise, I used VAT money to pay sub-contractors from my ltd company after unforseen circumstances hit my contract which meant I couldnt cope with the workload on my own, therefore risking a breach in my own contract. Now I have a defecit of around 19k. Should I goto HMRC and tell them this or should I wait and try to see if I can make this up, it may take me some time but right now I cannot afford to pay it.

I have been advised by these tax advice companys not to worry as im a limited company so the debt is my companys but not mine, is this true? Ive been offered a job in a permanent position with another contracted company to the client im contracted to (as they are alot bigger than me), again is this something im legally allowed to take? What will happen to my company if it is wound up? would I have to pay back the VAT?

thanks

Bean_Counter

tekfly wrote: »

Should I goto HMRC and tell them this or should I wait and try to see if I can make this up, it may take me some time but right now I cannot afford to pay it.

Why not contact HMRC's Business Payment Support Service with details of what you can pay when.

I had to use them recently to spread out a VAT payment over a few months when cashflow was tight and did not have any problems with it.

When will you get paid for the extra work that you have done, as I presume that you can use this money to pay the VAT?

Pennywise

As long as you've not taken too much money out of the company and as long as you've not agreed any personal guarantees, then yes, you can walk away from the company and leave the debts unpaid. If your only creditor is HMRC, they'll probably huff and puff and threaten allsorts but at the end of the day, they can't actually touch your personal monies.

By contrast, if you've taken monies or loans, or taken illegal dividends (i.e. without the right agreement and paperwork), or acted in any way to the detriment of one creditor over another, you could be personally liable.

For £19k I think I'd be going down the route of letting HMRC strike off the company and get what crumbs they can out of nothing. It's a lot of money to pay from your own future earnings when potentially you don't have to. Just be absolutely and 100% sure that you've done nothing wrong in your position as director and you'll be fine - and of course, don't take any more money out of the company!