voluntary liquidation

[elay5]

Options Request Scenario

Working as an IT contractor via a ltd business, registered in Scotland

Only debtor is HMRC, spoke to a solvency expert and his advice is liquidate the company, since have missed a few Time to Pay arrangements, and threatened with winding down order, best option is to go for voluntary liquidation which according to him will cost circa 4k – 6k

Any thots and is it a wise move as HMRC will come after the director or they wont?

Hard to see how you could be in that position without maladministration- so yes and they may report you may for unfit conduct and you may be disqualified from opening another company/being a director etc

How much do you owe HMRC?

‘Unfit conduct’ includes:

allowing a company to continue trading when it can’t pay its debts
not keeping proper company accounting records
not sending accounts and returns to Companies House
not paying tax owed by the company
using company money or assets for personal benefit

What will the liquidator achieve for his £4-£6k? Isn't it just £4-£6k less that HMRC will get from you?

How much do you owe HMRC? Is it PAYE, VAT or corporation tax?

Where did the tax money go? Did you draw it out as dividends/loans etc or was it "lost" due to bad debts, damages claims, etc? It makes a difference as to whether it was bad management (i.e. paying yourself too much) or a business loss (i.e. bad debts etc).

If you do nothing, Co House will eventually strike it off - usual procedure is for HMRC to object but unless figures are big, they won't appoint a liquidator themselves and will just continue to "bully" you.

HMRC may sometimes have powers to issue a debt order against your personally if you basically took their tax money and drew it out for yourself.

Like I say, the outcome all depends on how you got yourself into the situation.