Not enough money to pay corporation tax
Not enough money to pay corporation tax
Not enough money to pay corporation tax
The phrase I've not got enough money to pay my corporation tax is one that I am hearing quite a lot in the last couple of months. Callers to my company helpline really all have similar stories.
The vast majority of those calling me have limited companies through which they trade. They are in the main, computer contractors or engineers, who contract out their labour on long term projects and move from job to job. The weekly or daily contract rate is such that it makes sense to incorporate and invoice out the work, making use of the lower tax payable on dividends, rather than PAYE and NI.
In the cases I am seeing, my callers are telling me that the lucrative contracts that they used to have, have dried up or the work has slowed down. As a result of this, the money that they accounted for each week in respect of the potential corporation tax has been used to replace the lost contracts and support their families.
Every contractor has been hoping to replace the lost work and refill the tax pot. However, timing has not been right for everybody and many have found themselves with corporation tax demands that they have not been able to meet.
It is not untypical to receive a call from a contractor who has a tax bill in excess of 25,000, which cannot be paid. It is also quite common to find that the contractor is going full time employed rather than contracting. I am able to advise how to close the limited company down, and write off the tax and liquidate the insolvent company.
The procedure we use is a creditors voluntary liquidation. It is a procedure which can only be undertaken by an insolvency practitioner and involves calling a meeting of creditors to advise them that the company is insolvent and is required to be shut down. We then produce all the paperwork to do that, inform all the relevant authorities and formally close the business. The fee for undertaking all this work is 3500 plus vat. The net result is that the company ceases to exist and the tax liability is no longer payable.
http://www.articlesbase.com/taxes-articles/not-enough-money-to-pay-corporation-tax-2821493.html
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