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