Why is a friend closing his companies every 18 months?

[Deangtv]

I guess I already know the answer to that and I assume its tax and not having to pay it. He isnt really a friend, more a friends, friend that we drink with. He is in the sport management game and is always driving the lastest RRS and has the big house down the posh street. My question is how do people get away with this??

Doing a search on companies house he has had 8 companies in as many years, most dissolved and none have ever returned end of year account. Now I know he does some decent sized football player transactions in the English leagues and my moral compass twitches a little with his ethics. Do the FA or HMRC not check this kind of thing??

[The Leaper]

Same as the guy that fitted our bathroom recently. When I asked him for the bank details to pay him he told me he had to think because he had set up yet another company with a different bank for tax purposes. He have me the details but the transfer did not work because the account had not yet been actually established by the bank! He had to wait another two days before the funds could get transferred.

R.

[bigtime]

It winds me up also. We've been trading for circa 20 years paying tax etc and one of our competitors opens a new LTD company every year or so and dissolves the old one without filing any accounts and paying tax. They still trade with the old name on Facebook and their website etc though.

[RC1807]

He'll get his come uppance - and will be excluded from being a director - eventually..... unless someone complains about him in the meantime

[vulture1]

The Leaper said:

Same as the guy that fitted our bathroom recently. When I asked him for the bank details to pay him he told me he had to think because he had set up yet another company with a different bank for tax purposes. He have me the details but the transfer did not work because the account had not yet been actually established by the bank! He had to wait another two days before the funds could get transferred.

R.

Surely if something went wrong and you went after the company well that company has been wound down now no liability.

[Mr Whippy]

bigtime said:

It winds me up also. We've been trading for circa 20 years paying tax etc and one of our competitors opens a new LTD company every year or so and dissolves the old one without filing any accounts and paying tax. They still trade with the old name on Facebook and their website etc though.

Can you actually do that though?

Take all the money out? Close it down, and not account for it?

No one checks?

[Eric Mc]

Sounds like he is a serial fraudster. Unfortunately, there is no enforcement of the rules so guys like him get away with it.

Apparently, every day THREE THOUSAND FIVE HUNDRED new companies are registered at Companies House. They cannot manage and monitor all the companies on their books.

Ever since the early 90s, we've made it easier and easier to set up, and close down, limited companies. This is the end result - a system that has got out of control.

[deckster]

Known as 'phoenixing' - and as said, it's either to avoid tax or to get out of paying debts and completing contracts. Or, probably both. Either way, it's sharp practice, should be illegal, and there is no valid reason that a professional and genuine business would be doing this.

[Mr Whippy]

Eric Mc said:

Sounds like he is a serial fraudster. Unfortunately, there is no enforcement of the rules so guys like him get away with it.

Apparently, every day THREE THOUSAND FIVE HUNDRED new companies are registered at Companies House. They cannot manage and monitor all the companies on their books.

Ever since the early 90s, we've made it easier and easier to set up, and close down, limited companies. This is the end result - a system that has got out of control.

Shirley you just look through for companies with no filing history long after starting?

Names, addresses, insta-ban from starting more if any haven’t been wrapped up cleanly?


I can only assume some people are inputting fraudulent details somehow, or would that not work with your bank?

What’s to stop some future audit blitz catching out thousands of people, a bit like the IR35/36 thing?

[MaxFromage]

Mr Whippy said:

Shirley you just look through for companies with no filing history long after starting?

Names, addresses, insta-ban from starting more if any haven’t been wrapped up cleanly?


I can only assume some people are inputting fraudulent details somehow, or would that not work with your bank?

What’s to stop some future audit blitz catching out thousands of people, a bit like the IR35/36 thing?

Yes it would be incredibly easy with a few hours data mining by HMRC. All the correct info is there, just no-one is looking.

HMRC really are a shower of . So far in as many months, I have had three separate occasions where HMRC have made adjustments to our filings with HMRC (one corporation tax and two self assessment) so that the tax take is £10K lower than it should be. There is genuinely no reason why these errors should be made. I can only assume the standard of new recruits is below stupid.

[Mr Whippy]

You’d think they’d be going after these people as easy targets?

I’d imagine they’d take more back in per unit cost to employ someone to do it?


I wonder how many of these phantoms also got covid support loans and it’ll be impossible to get back…


Indeed makes me very sad. I’m glad I’m using maximum (ok) tax avoidance.
Maybe I need to go LTD and optimise even further.

[Simpo Two]

This kind of thing has been going on ever since Esther Rantzen of 'That's Life' brought it to public attention in the 1970's. I'm amazed that successive governments have been unable to stop professional bandits jumping from company to company with gay abandon leaving a trail of creditors in their wake. And yet there are those who will only deal with limited companies because they think it's a guarantee of something.

Another reason why people my open and close companies every two years is because they're crap at running a business.

[MitchT]

Once knew someone like this. Borderline celebrity lifestyle, seemingly funded by taking more out of a limited company than it could sustain before winding it up owing loads of money and then starting a new one. People who abuse the limited company system like this should become personally liable.

[Mikebentley]

It’s a disgrace that these shysters get away with this. Someone has a shop, doesn’t pay their business rates etc then changes the company name and rises phoenix like avoiding their liabilities.
This sort of theft is costing our economy billions whilst decent businesses do the right thing.

[take-good-care-of-the-forest-dewey]

MaxFromage said:

Mr Whippy said:

Shirley you just look through for companies with no filing history long after starting?

Names, addresses, insta-ban from starting more if any haven’t been wrapped up cleanly?


I can only assume some people are inputting fraudulent details somehow, or would that not work with your bank?

What’s to stop some future audit blitz catching out thousands of people, a bit like the IR35/36 thing?

Yes it would be incredibly easy with a few hours data mining by HMRC. All the correct info is there, just no-one is looking.

HMRC really are a shower of . So far in as many months, I have had three separate occasions where HMRC have made adjustments to our filings with HMRC (one corporation tax and two self assessment) so that the tax take is £10K lower than it should be. There is genuinely no reason why these errors should be made. I can only assume the standard of new recruits is below stupid.

Have you seen what HMRC staff get paid though... It's hardly surprising they're borderline fit for purpose. 30k per year for a case worker.

[Eric Mc]

For 40 years successive governments have undermined the regulatory systems that were once in place. Nobody is minding the store anymore.

[Raymond Reddington]

I know a couple of ltd company contractors like this... one of them earned nearly 2 grand a week for the 4 years I worked with him and didn't pay a single penny in tax, just didn't file anything and let the companies dissolve. It really boils my piss. Before ir35 the tax situation meant that he would have kept a large chunk of that money anyway so why be so greedy?

[Condi]

Mr Whippy said:

You’d think they’d be going after these people as easy targets?

I’d imagine they’d take more back in per unit cost to employ someone to do it?

Problem is not identifying them, its the cost of gathering evidence, taking them to court, chasing money from a business which no longer exists. The whole system is a mess, and it's been encouraged as part of "Business Britain" resulting in lots of dodgy Russian money moving through the UK.

Politicians, especially the ones currently in the Government, have little desire to do anything about it though. Cleaning up the City has been talked about for at least the last 15 years, but nobody has the political willpower to actually do anything, it is easier to tell teachers and doctors they are not going to get an inflation-linked pay rise than actually go after the tax evaders who should be paying for it.

[KarlMac]

Recently one of our sites has asked me to set up a new supplier and as part of the due diligence I noticed the director has held 19 previous directorships for companies based at the same address that are now closed.

I’m not an accountant but I know enough to know that it stinks.

[Simpo Two]

Condi said:

Cleaning up the City has been talked about for at least the last 15 years, but nobody has the political willpower to actually do anything, it is easier to tell teachers and doctors they are not going to get an inflation-linked pay rise than actually go after the tax evaders who should be paying for it.

Talking of leaky sieves, don't forget benefit fraudsters.