You have run a successful business for a number of years and are well known in your industry as an expert.
What you failed to do was understand how to take money out of your limited company.
Perhaps you have not appointed an accountant. Due to the lack of understanding this has led to a drastic situation.
The Company, although traded successfully, has not had sufficient profits to take out the amount of dividends that the Director has taken. The consequence of submitting the accounts to Companies House, has led to an HMRC enquiry.
As a result, the company has received a demand for outstanding Corporation Tax. This is entirely unexpected and has ultimately led to the demise of the Company.
The moral of this situation is that advice should be obtained early and often. Surround yourself with good people and ensure that the advice given is totally understood. If not ask questions. You do not want to lose your house to pay back money that is due to the Company.
Remember:
· Dividends can only be paid out of profits.
· Dividends are paid
after corporation tax has been deducted.
· If you take a dividend that is not covered by profit, you will have taken out a Directors Loan which must be repaid.
So, getting ‘it’ right it much better than getting ‘it’ wrong.
Here’s the
HMRC advice on taking money out of a limited company.
