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Where Taxpayers and Advisers Meet

Outstanding Tax Balance before switch to Limited Company

SkewE2
Posts:1
Joined:Fri Aug 30, 2019 11:13 pm
Outstanding Tax Balance before switch to Limited Company

Postby SkewE2 » Fri Aug 30, 2019 11:19 pm

Hi all

At the minute I'm trading as a sole trader. I'm a little behind with my tax, but I've a direct debit in place with HMRC to get me back on track.

The money coming into the business is going to rise sharply. It means I will be looking to switch from a Sole Trader to a Limited company.

Obviously I will cease as a Sole Trader at this point, but can I do this with outstanding tax? So, could I get in touch with them, explain I am no longer a Sole Trader, but now part of a Limited Company and continue to make my monthly payments to them to clear the amount that is still owed. At the current rate, this will take about another 8 months given that I will need to file for 2019-20 as the company runs April to April.

I guess I'd be paying this as someone who's now employed albeit Director of the company moving forward. I just wasn't if that when I stopped as a Sole Trader that the account would need immediate settlement. Ideally, the increaase in money would be a lump sum to just wipe it all off in one, but it's more an increase in hourly, for example, from £10 up to £20 per hour. Payments will increase though as a result to more money coming in.

I hope that makes sense and thanks in advance for any help.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Outstanding Tax Balance before switch to Limited Company

Postby pawncob » Mon Sep 02, 2019 12:30 pm

Your tax liability exists regardless of your trading medium. You'll continue to pay off your debt whether you're employed (by the LTD) or self employed.
With a pinch of salt take what I say, but don't exceed your RDA


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