Husbands massive debt

Mariew89

Our current situation, after weighing everything up and talking with the accountant and debtline, is that we are going to try our utmost to keep the business afloat.  This means, firstly focusing on his personal tax, which is £109k.  So I’m currently taking photographs of practically everything we own, to put on eBay, in the hope we can raise at least 20% of that and put a payment plan in place for the rest.

Husband is working all hours to get the business earning again, so that we can afford the payments, then once we’re comfortable with all that, we can look at clearing the business debts.  It’s going to be a rough and bumpy ride, but I’m holding on tight! 

SomeMadeUpName

Mariew89 said:

Our current situation, after weighing everything up and talking with the accountant and debtline, is that we are going to try our utmost to keep the business afloat.  This means, firstly focusing on his personal tax, which is £109k.  So I’m currently taking photographs of practically everything we own, to put on eBay, in the hope we can raise at least 20% of that and put a payment plan in place for the rest.

Husband is working all hours to get the business earning again, so that we can afford the payments, then once we’re comfortable with all that, we can look at clearing the business debts.  It’s going to be a rough and bumpy ride, but I’m holding on tight! 

I'm getting confused here:
Above you say he has a personal tax debt of £109k, but earlier in the thread you stated that personal debt was only £20k, and the £109k was tax arrears owed by the company and included in a total company debt of £250k.
I appreciate you are relaying second hand info, as it comes into you, from a confused situation. I am guessing your earlier statement was incorrect and you now have a better grasp?
It's really important as imo IF the tax debt was all within the Ltd Co AND your husband's behaviour as a Director had not been remiss THEN the last thing I would be doing is selling personal assets to finance the debt (or use a personal credit card). Business Debtline would I'm sure warn you off this too.
Do not be afraid to fold up the tents on a Ltd Co. I am not saying do it (there are down sides for sure), just do not discount it. The Ltd Co is not him, he is not the Ltd Co. Business Debtline are super helpful, if you haven't called them already then do it soon.
Businesses with honourable, honest directors/PSCs go down every day. Most of the individuals involved go on to have successful careers/lives, maybe with new businesses that generate livelyhoods for others and taxation income for the economy.
Trade out of it if you can, but be careful not to throw good money after bad (especially if it's yours not the businesses).

Minkym00

I hope the OP comes back to this thread as, I have to say, that my first thoughts on reading the OP’s latest comment were exactly the same as @SomeMadeUpName’s.

Unless you have absolute certainty that he can trade out of this position, and I doubt anyone could realistically say that at the moment, then why sell all of your assets? Your husband could voluntarily liquidate the company and walk away and, as long as the debts have been incurred due to COVID and there has been no activity which would be classed as misconduct (examples mentioned on one of my previous answers), he can start up again with a new company. That’s the beauty of the insolvency legislation - you can liquidate and start up again the next day without debt. If it ends up folding anyway you will have lost your possessions and THEN he may have committed the misconduct of insolvent trading and could then become personally liable for the remaining debt.

Mariew89

Thanks guys, I did initially think it was tax, that was related to the business, however 109k of it is personal tax.  I don’t know much about business, so I am learning on my feet, hence this thread looking for advice.

So we are selling stuff, in order to offer a lump sum on this tax bill first and foremost, in the hope he will be offered a payment plan thereafter.  He does have a bit more time with the business debts (mid April) and if it doesn’t pick up, then we accept that the business may fold.  Would this be seen as mistrading?  I’m not really sure what that is tbh, but appreciate your help.

DoctorStrange

Do you know how has he accrued £109k in personal tax? Do you know if there's any sort of loans involved, or perhaps he has been taking dividends to fund the family lifestyle but not putting the tax aside? 

Knowing a little more about how this situation arose can perhaps help when trying to think of solutions.

Mariew89

There are no loans involved on the personal tax side, but he has bounce back loan on the company side.  His other personal debts are from credit cards, but were concentrating on the tax first.  We are aware he could end up with a ccj from the credit cards.

im not 100% about the ins and outs, but basically the personal tax accrued and then there was some sort of government (covid related) scheme whereby an extension was given??  Some of you probably know more about that than I do.  So his tax due isn’t a typical 1 year one.

The business was beginning to struggle before covid, due to family circumstances, I had to finish work to look after our violent, complex, autistic daughter and was then badly injured by her, so his work hours diminished, because I was unable to do anything physical.  At that point in time, it was impossible to give the business the same attention, due to time spent being called out to schools, who couldn’t manage our daughters behaviour and time spent soothing her out of meltdowns etc; if you know about autism, you’ll know this is a 24/7 thing and draining on all levels.  However, despite this, the business was still managing and “in the black”, but probably only ticking over.  Our daughter is now settled in a fabulous residential school and in theory that meant work on the business could pick back up, however, covid hit (and an unexpected google algorithm) and it hasn’t been able to sprout back, rather the opposite.  So money set aside for tax has been used for living costs, along with our savings.  This was what I was unaware of, I thought everything was ok, because bills were being paid. All the while he was working away trying and hoping to keep it from me.

I’m not actually bothered about losing belongings (well a bit, but in the grand scheme of things, no) I really don’t want to lose the house though, it was our forever home and I don’t know how our daughter will handle us moving, she still visits and stays over one night a week, and she needs routine and stability to stay regulated.

So it’s operation, get this tax bill paid!!

It really does appear feasible that he can turn the business around, even as it stands now.  He’s working very hard on it and once restrictions are lifted it will be a much better outlook.  Although I appreciate, it’s still somewhat of a gamble.

It’s an awful situation to be in, but I keep telling myself that there are people much worse off.  I’m happy for all your help on here though, it’s been a godsend, especially pointing us towards the debtline charity. 

DoctorStrange

I sympathise. The reason I was asking about loans was in case the controversial "loan charge" was a factor, as there's support groups for those affected by that. 

It does seem for now you should try a SOA on DFW board. The folks there will help you run through your income and  outgoings, and help you spot where savings can be made. 

Good luck with it all!

SomeMadeUpName

Best of luck with everything. Sounds like you are in a bad situation that has come about due to really difficult circumstances, it may have been exacerbated by denial but it wasn't caused by it. 
Keep your domestic finances and that of the business separate as much as poss. For example the VAT man, if you ask for a payment scheme, has a habit of asking if the directors have money they can put in, or a credit card to use, don't do it.
Bounce Back loan can be paid back over 9 years after the int free finishes, and in that 9 years then you can have 1 repayment free 6 months, and 3 int only 6 months. So that is super flexible. Check that info by btw, it's from memory.
Any VAT deferred under Covid can go back to HMRC over several months, so long as you sign up online for the scheme by mid June latest. I did talk to them today and they will accept longer schemes with justification, I think 2 years easy enough, 3+ years a bit of a push. Hopefully your husband and his accountant have all this on their radar.
It does sound like underlying it all your OH has a good profitable business. IMO they sometimes go bad the quickest, as long term success with regular 'high' drawings can then drain a business quickly if the trading profit goes south unnoticed.

TVAS

What are you doing Mariew89?
He needs to talk to you so you can help him which you are doing now but really he should be doing this. You need to get a job if you don't have one just to keep the house going.  

Mariew89

We are a team, working through it all together now,  I do have a job and I am “keeping the house going”.