Business and legal advice
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Description
Experience Level: Expert
My partner and I have a limited company. We traded as a cafe business for 3 1/2 years. In February this year we sold the business to a friend but she was not in a financial position to purchase outright. So we are presently 3 co-directors although she has full power to operate the business without us.
We originally borrowed all the money to purchase the business using 1 rental property each to secure the loan with the bank (Lloyds TSB ). The properties are still being used as collateral until the friend is able to take over the loan.
The friend carried out extensive improvements to the cafe and then claimed for a large refund of VAT and it subsequently came to light that previous company VAT calculations had been incorrect and the VAT office are now demanding around £20,000 of unpaid tax.
Clearly my partner and I are liable for this and not the friend. When we handed over the business there was less than £1000 left in the bank account.
We have had our friend's agreement to the company being liquidated or dissolved but we have 2 concerns :-
1. Will that affect our securities with the bank? The 2 properties are together worth about £250,000.
2. Would we be affected personally in terms of future borrowing/credit rating, etc.
Would we have to declare it on forms which ask "have you ever been bankrupt", for example?
Finally, going back to the VAT debt assessment, the reason for the incorrect VAT calculations was that the 2 previous owners had benefitted from an agreed 30% discount for take-away sales (this arrangement stood for over 20 years) and we assumed that the discount would apply to our business as we carried on running it on the same lines as the 2 previous owners. We would be grateful for your advice as to whether it is worth appealing against the assessment, assuming we decide that the liquidation or dissolution courses are not viable.
We originally borrowed all the money to purchase the business using 1 rental property each to secure the loan with the bank (Lloyds TSB ). The properties are still being used as collateral until the friend is able to take over the loan.
The friend carried out extensive improvements to the cafe and then claimed for a large refund of VAT and it subsequently came to light that previous company VAT calculations had been incorrect and the VAT office are now demanding around £20,000 of unpaid tax.
Clearly my partner and I are liable for this and not the friend. When we handed over the business there was less than £1000 left in the bank account.
We have had our friend's agreement to the company being liquidated or dissolved but we have 2 concerns :-
1. Will that affect our securities with the bank? The 2 properties are together worth about £250,000.
2. Would we be affected personally in terms of future borrowing/credit rating, etc.
Would we have to declare it on forms which ask "have you ever been bankrupt", for example?
Finally, going back to the VAT debt assessment, the reason for the incorrect VAT calculations was that the 2 previous owners had benefitted from an agreed 30% discount for take-away sales (this arrangement stood for over 20 years) and we assumed that the discount would apply to our business as we carried on running it on the same lines as the 2 previous owners. We would be grateful for your advice as to whether it is worth appealing against the assessment, assuming we decide that the liquidation or dissolution courses are not viable.
Robert I.
100% (2)Projects Completed
3
Freelancers worked with
2
Projects awarded
75%
Last project
27 Sep 2013
United Kingdom
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