corporation tax

valerie1976

My husband left a limited company as a director last September and has just been contacted by an existing director to pay a share of corporation tax owed for2011-2012, is he liable to pay even though he is no longer a director?

John_Pierpoint

Was the company trading while insolvent ?

valerie1976

The company is still trading and not insolvent

holly_hobby

The tax should already been held in the co account.

I am guessing that no provision was made from net profit of the time.

So I would say yes, if he was still an active director during that time, and esp if he received renumeration (drawings/div's) from turnover during the same trading period - quick call to HMRC will confirm though (or your accountant of course) .

Hope this helps

Holly

Pennywise

Corporation tax is a company liability, not a liability of the directors, past nor present. The only ways he is liable is if he agreed to pay a share of the corporation tax when he left as part of any settlement or if he drew out too much, i.e. overdrawn directors loan account. You need to go back to the agreement and accounts when he left.

mania112

Nothing in law to say he has to pay. The company (and not the directors personally) is liable to pay.

Depends what your husband WANTS to do, it's his choice (unless of course there was an agreement to pay the bill as part of his departure).

nomunnofun

I have tried to get my head around the acounting treatment of a director paying the corporation tax of the company and have given up. Is not part of the whole point of incorporation the fact that the company and its directors two separate entities?

chrismac1

Yes you are correct. The liability is 100% the company's.

Mary_Hartnell

Here is someone else who failed to get his head round the concept of the directors not being a personification of the company.

http://en.wikipedia.org/wiki/Joseph_Kagan,_Baron_Kagan

zygurat789

Mary_Hartnell wrote: »

Here is someone else who failed to get his head round the concept of the directors not being a personification of the company.

http://en.wikipedia.org/wiki/Joseph_Kagan,_Baron_Kagan

But during most of his period there was no Corporation Tax.

oldsmokie

Agree that the company is a separate legal entity and is responsible for the payment of the tax. However, the directors do have a respnsibility to ensure that dividends are paid out of distributable profits. These need to take future liabilities into account. In other words a director can't distribute all of the profits, leave money in the bank and plead poverty when a corporation tax bill comes along.

There is a reasonableness test here but the OP needs to be sure that her husband acted prudently when recommending any dividend payment.