The worst has happened, my Ltd is going to go bust with overdrawn DL and a Corp Tax bill I can't pay
Posted: Wed Aug 02, 2017 9:16 pm
I won't bore you with the actual death of my company, other than to say it was a total shock. One minute the client was telling us we were brilliant and had work till 2019, the next week we were out as the role was being "outsourced".
We have been running with very tight cash flow for years since various oil industry cuts, but this was still unexpected.
We usually take directors loans all year then make one large dividend payment just after year end. I can't even remember why we started this but I guess it must have been, in hindsight, the time things started to go awry.
Our final accounts look horrible;
overdrawn DL of around £36,000
Corporation tax debt of around £19,000 (deadline for payment not till January 2018)
We have no savings and have signed on for JSA and CTC. We have around £50k equity in our house, although the houses either side have been for sale for over a year with no viewing so not exactly a quick fix solution (even if we wanted to sell and become homeless)
We are on a debt management scheme for our non priority debts and have mortgage arrears.
It is weirdly cathartic to put it all down in writing...
Anyway, what I'd like to ask for opinions on is this; I am assuming HMRC will rightly hold us accountable, by way of repaying the Directors Loans for the £19k corp tax. Would we also have to repay the balance of £17k or are HMRC only going to care about the amount they are due? It would be our intention to ask for time to pay the £19,000 and to hope to sell the house or even by some miracle find another contract in the meantime.
However my interest here is in the balance of the DL, of around £17k. The business will have no other creditors so do we write off the balance of the loan and then in due course pay income tax on the benefit? Anything else?
With thanks and please don't judge, it really could happen to anyone in the oil industry these days. Hard times for all.
We have been running with very tight cash flow for years since various oil industry cuts, but this was still unexpected.
We usually take directors loans all year then make one large dividend payment just after year end. I can't even remember why we started this but I guess it must have been, in hindsight, the time things started to go awry.
Our final accounts look horrible;
overdrawn DL of around £36,000
Corporation tax debt of around £19,000 (deadline for payment not till January 2018)
We have no savings and have signed on for JSA and CTC. We have around £50k equity in our house, although the houses either side have been for sale for over a year with no viewing so not exactly a quick fix solution (even if we wanted to sell and become homeless)
We are on a debt management scheme for our non priority debts and have mortgage arrears.
It is weirdly cathartic to put it all down in writing...
Anyway, what I'd like to ask for opinions on is this; I am assuming HMRC will rightly hold us accountable, by way of repaying the Directors Loans for the £19k corp tax. Would we also have to repay the balance of £17k or are HMRC only going to care about the amount they are due? It would be our intention to ask for time to pay the £19,000 and to hope to sell the house or even by some miracle find another contract in the meantime.
However my interest here is in the balance of the DL, of around £17k. The business will have no other creditors so do we write off the balance of the loan and then in due course pay income tax on the benefit? Anything else?
With thanks and please don't judge, it really could happen to anyone in the oil industry these days. Hard times for all.