Huge mess- ltd company+ debt.+collections firm. Help!
Discussion
Did she sign a personal guarantee for the debit/credit card? If so she is potentially liable for the debt. Your best bet is for your GF to wind the company as a creditors voluntary liquidation. See here for a layman 's guide to how the process works. After the debt chasers find out the company is in liquidation it is possible they will follow up on any guarantees.
Why is there an unpaid credit card for £2k? i.e. what was the money spent on and by whom and why hasn't it been paid off?
Despite being a limited company, if it can be shown that debts were run up with no intention of ability for the company to pay them off then as a director/shareholder she can be held personally liable, whether there is a PG in place with the bank or not. (Look up 'wrongful trading' as this is one scenario where the 'veil of incorporation' can be lifted.)
Despite being a limited company, if it can be shown that debts were run up with no intention of ability for the company to pay them off then as a director/shareholder she can be held personally liable, whether there is a PG in place with the bank or not. (Look up 'wrongful trading' as this is one scenario where the 'veil of incorporation' can be lifted.)
If you are not using the Ltd Co any more you need to close it up before you start getting fines for not supplying accounts.
The other issue is that the VATman is going to want the VAT you have charged.
In a nutshell she just needs to go back and account everything properly so she knows where she stands, with:
VAT
Corporation Tax
Annual returns and Accounts with Companies House
Personal income tax.
You can't do any of that without accounting things properly.
The other urgent issue is the credit card. Be careful here as there are two pitfalls. It may not be as easy as simply writing this off to a folded Ltd Co. I doubt that any bank supplies credit to a new Ltd Co without a directors guarantee.
If she has signed one of these then she would be liable for not only the amount spent on the credit card but also the interest to date as well as the recovery costs. You need to find out if she has done this.
The other pitfall is if out of that £2000 she has made personal purchases on the card. If I were Lloyds I would be looking at that even if I didn't have the directors guarantee, as that may make her personally liable too.
In a nutshell though, although you can get advice on here, this is something to do properly, you need to sit down and go through everything with an accountant who will be able to advise and file what is needed on your behalf. That is going to be reasonably time consuming though so be prepared to cover it with a few hundred quid...
The other issue is that the VATman is going to want the VAT you have charged.
In a nutshell she just needs to go back and account everything properly so she knows where she stands, with:
VAT
Corporation Tax
Annual returns and Accounts with Companies House
Personal income tax.
You can't do any of that without accounting things properly.
The other urgent issue is the credit card. Be careful here as there are two pitfalls. It may not be as easy as simply writing this off to a folded Ltd Co. I doubt that any bank supplies credit to a new Ltd Co without a directors guarantee.
If she has signed one of these then she would be liable for not only the amount spent on the credit card but also the interest to date as well as the recovery costs. You need to find out if she has done this.
The other pitfall is if out of that £2000 she has made personal purchases on the card. If I were Lloyds I would be looking at that even if I didn't have the directors guarantee, as that may make her personally liable too.
In a nutshell though, although you can get advice on here, this is something to do properly, you need to sit down and go through everything with an accountant who will be able to advise and file what is needed on your behalf. That is going to be reasonably time consuming though so be prepared to cover it with a few hundred quid...
GCH said:
7.2 "Each partner (whether or not they have signed this authority form) will be joiintly and severally liable for all liabilities of whatever nature of the partnership to us together with interest, fees and charges. Therefore each partner is sperately responsible to use for all debts and liabilities of the partnership and not just a share of them. We may take action against all or any of the partners. Please refer to our seperate leaflet "what you need to know when entering a partnership-joint and several liability" for further details"
That's how partnerships work (as opposed to sole traders and limited companies). It's a very big reason not to go into partnership.One bit seems odd:
GCH said:
She worked for him from sept 08- feb 09 and was paid £940/month inc. vat.
VAT?Was she trading through a limited company or a partnership?
If a limited company, how up to date is the com-pany with Companies House?
If a limited company, how was she extracting her personal income from the company?
Did she ever take on an accountnat to to help her with the running of the company (or partnership)?
If a limited company, how up to date is the com-pany with Companies House?
If a limited company, how was she extracting her personal income from the company?
Did she ever take on an accountnat to to help her with the running of the company (or partnership)?
GCH said:
Simpo Two said:
GCH said:
7.2 "Each partner (whether or not they have signed this authority form) will be joiintly and severally liable for all liabilities of whatever nature of the partnership to us together with interest, fees and charges. Therefore each partner is sperately responsible to use for all debts and liabilities of the partnership and not just a share of them. We may take action against all or any of the partners. Please refer to our seperate leaflet "what you need to know when entering a partnership-joint and several liability" for further details"
That's how partnerships work (as opposed to sole traders and limited companies). It's a very big reason not to go into partnership.It is a limited company...not a partnership. Actually, that bit above is preceded by the bit
"If you are a partnership the following terms will apply"
So still none the wiser regarding liability..
GCH said:
She worked for him from sept 08- feb 09 and was paid £940/month inc. vat.
VAT?
Well if your customers are not VAT registered then you should not register, as the vat you can reclaim on expenses will be less than the vat you charge customers (if you're turning a profit!) so you'll be worse off if you leave the "vat inclusive" (i.e. total) cost to your customers unchanged. So you're better off not registering, so that you can keep the entire of the gross billing to your customer.
On the other hand, if your customers are VAT registered then you should register. It means that they have to pay you more, but they can reclaim the VAT, so it doesn't actually cost them any more. But it also means you can claim the VAT back on things you buy for the company. This the position of the OP's other half, so it seems like she made the right descision regards registering for VAT. She may have let herself down by not keeping up with the paperwork, though.
On a slightly differnt note, I still would like to know why there is a £2k credit card debt, who ran it up/on what, and why it's not been paid.
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