Potential Bankruptcy - help needed on VAT and Tax

Flyright

HMRC do not make the decision to disqualify, the OR does. And yes, he absolutely can be disqualified for failing to ensure the company paid over the PAYE and/or VAT due..much the same as you can view the types of reasons people get a BRU/BRO you can look at examples of directors who have been disqualified and non-payment of HMRC debt is a recurring theme.

wok_boy

leveller2911 wrote: »

Don't entirely agree with you there.If he owes £10k in VAT then he's charged clients VAT and not passed it on to HMRC, ie he's possibley stole it...........

The VAT money was'nt his to spend.

I'm VAT registered and when I get paid by my clients I write a cheque for the VAT straight away and put it into a seperate account so that when my VAT quarter ends the money is there to pay it......Its very simple and being "Dis organised" is NO excuse.....

Let's lay off the judgements as the sticky at the top of the forum suggests.

wok_boy

debtinfo wrote: »

If the OR investigates and finds wrongdoing in the running of the company. He can certainly be disqualified from being a director for up to 15 years

As per my previous post if it is found he's been dishonest.

leveller2911

wok_boy wrote: »

Let's lay off the judgements as the sticky at the top of the forum suggests.

So its not being judgemental in saying "He's not dis-honest, he's just dis organised" ....Unless i'm mistaken thats making a judgement on someones character.....

The fact remains that he's charge customers VAT (which is'nt his) and then spent it.clearly stealing....

VAT is a tax, as a registered VAT business your a tax collector, its bad enough people having to pay it in the first place but then for the guy to spend it is just plain robbery.......

I have always been polite, not a Troll but its like a "happy clappy Church " in here and theres nothing wrong with honest answers and forming a judgement from the OP.....

Like I said in my original post its not rocket science to seperate the VAT money from income.........No excuses

Many people including myself have fallen on hard times and not had a "Pot to p1ss in" but would never steal money....

wok_boy

leveller2911 wrote: »

So its not being judgemental in saying "He's not dis-honest, he's just dis organised" ....Unless i'm mistaken thats making a judgement on someones character.....

The fact remains that he's charge customers VAT (which is'nt his) and then spent it.clearly stealing....

VAT is a tax, as a registered VAT business your a tax collector, its bad enough people having to pay it in the first place but then for the guy to spend it is just plain robbery.......

I have always been polite, not a Troll but its like a "happy clappy Church " in here and theres nothing wrong with honest answers and forming a judgement from the OP.....

Like I said in my original post its not rocket science to seperate the VAT money from income.........No excuses

Many people including myself have fallen on hard times and not had a "Pot to p1ss in" but would never steal money....

If you read the OP correctly, he is not judging another member of this forum!!!

leveller2911

wok_boy wrote: »

If you read the OP correctly, he is not judging another member of this forum!!!

Read my post again and you will find I'm not either.....;)

JasonLVC

I've come across many traders who have cash flow difficulty and dip into the VAT money to keep the business afloat, it is incredibly common and so I'm confident that HMRC will not pursue the OP's friend for the £10k.

That doesn't make it right but it does happen and is usually down to disorganisation, general ineptitude but rarely deliberate intent.

The £10k belongs to the Ltd Co and that is where it will remain.

HMRC are unlikely to disqualify the Director unless they believe there is wrong doing at play which is difficult to prove (but say paying yourself £50k salary two days before liquidating the Ltd Co is not the thing to do as that will draw attention to you).

What HMRC can (and always do) is that they can make it difficult for the Director of a Ltd Co from registering for VAT in the future, where the Director or people connected to the Director had a business go under owing HMRC money.

If the Director(s)/connected parties set up a new business (and especially if it is similar trade/market as the old company), HMRC will insist upon a deposit before they permit VAT registration. Deposit will be roughly 50% of whatever turnover the new business predicts it will earn in 1st year.

If you don't pay the deposit after HMRC have requested you do so, HMRC can levy penalties of £100 (I think, can't remember - too hut/sunny for my brain) PER DAY, but that deposit can be refunded if the New company pays all their VAt returns on time for about 6 months.

leveller2911

JasonLVC wrote: »

The £10k belongs to the Ltd Co and that is where it will remain.


Being registered for VAT Jason mean they collect it on behalf of HMRC....

How can it be the Companies money? You collect it from the client and then pay it to HMRC, he's kept the money and spent it,its theft....Its not earnings .

Or are you talking about the £10k tax owed? and not £10k vat?


PS : Nice sig by the way....

Flyright

As I previously said, HMRC do not choose to disqualify, it is the OR who makes that choice. If the company ends up in liquidation then the OR has to investigate the reasons why and failure to pay HMRC is one of the reasons why the OR may seek to disqualify a director. HMRC play no part in making that decision.

debtinfo

Whilst i am not going to get into the likelihood of a disqualification as we only know a snippet of the information, it is certainly a possibility as shown by this excerpt from the Insolvency service Guide for Directors

[FONT=Arial,Bold][FONT=Arial,Bold][FONT=Arial,Bold]

When can disqualification occur?

[/FONT][/FONT][/FONT]

When a company has failed, the OR (or IP in a creditors' voluntary liquidation, an administrative
receivership or an administration) has to send the Secretary of State a report on the conduct of all
directors who were in office in the last 3 years of the company's trading. The Secretary of State has
to consider whether it is in the public interest to seek a disqualification order. If it is, the Secretary of
State will apply to the court for an order, and the court will decide whether to grant it.
Examples of conduct that may lead to disqualification include:

�� continuing to trade to the detriment of creditors at a time when the company was insolvent

�� failure to keep proper accounting records

�� failure to prepare and file accounts or make returns to Companies House

�� failure to submit tax returns or pay over to the Crown tax or other money due

�� failure to co-operate with the OR/IP.

the full guide can be founnd here

http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/guidefordirectors.pdf