Remortgage to pay of taxman?

Sitting in a world of hurt of my own doing atm.



Have a limited company, and the company, and hence I, owe the tax man approx 80,000 euro from the last 4 years.



Now he wants his pound of flesh, which is fair enough.



With very limited capital available, my only options to square this are to agree a repayment schedule with the tax man which involve hefty interest rates or re-mortgage.



House is worth about 350,000 with about 140,000 owing and we are 6 years into a 20 year mortgage with IN( don't ask ) paying roughly 3.5% atm.



Any thoughts on approaching a lender with regard to re-mortgaging to clear the tax man.



I know they don’t like it but has anyone experience of doing this?



And also as I will essentially be lending the company 80,000 I assume I can withdraw the funds over the next few years as loan repayments and don’t have to pay tax?





Thanks

I am not an expert and will definitely be corrected but...

I thought you and your ltd company were separate. Can you put your limited company in receivership/liquidation? Then it's the company, and not you, that owes Revenue the money.

I thought that was the whole point of ltd companies?

sluice44 said:

I am not an expert and will definitely be corrected but...

I thought you and your ltd company were separate. Can you put your limited company in receivership/liquidation? Then it's the company, and not you, that owes Revenue the money.

I thought that was the whole point of ltd companies?

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Not any longer. Directors can be (and are, as a matter of course) held personally responsible for company debts in a very wide range of scenarios.

Any thoughts on approaching a lender with regard to re-mortgaging to clear the tax man

You must be totally upfront with the Lender about the arrears in Tax. You may get short sift, and a straight decline. However, I know of one person in a similar problem who dealt with a Broker and they arranged the probelm for them. They had a good reason for building up the tax bill and had a lot of property behind them. Your existing lender is your first and maybe only point of call!!!!

I can't tell by your post if you are still in business, but would a chat with you, your accountant and the taxman not be an option with regards to a spread of payments?

Still in business and with a good turnover and reasonable profit.


business is viable excluding the liabilities to the tax man.

Accountant has suggested the remortgage route but hasn't offered a whole lot of advice about it.

Arranging repayments through the tax man is a last option, essentially will be paying tax + penalties +interest on late payments and then a serious rate of interest on top of all that.

Thanks for all the replies

I personally know of somebody who was very sloppy with his VAT for years.

Got hit wit a €60k bill. They all sat down together and came to an arrangement, with regards to payment over time.

The Revenue might be more interested in seeing your business survive and to reconcile your payments over time, with a lower interest.

Their other option might be to put you along with the other high percentage of convicted defaulters who have not paid.

Personally, I would speak to another accountant, to get a second opinion.

Sorry to hear about your difficulties. If you have a good turnover and a good profit, then your accountant (who is your auditor?) should be able to write a letter confirming this. I think under those circumstances you should be able to top up your mortgage. If you have to borrow, I imagine its better to borrow at a low mortgage rate and loan the money to your company, rather than pay a high interest rate to the tax man.

Alternatively, why don't you approach the bank with whom you have your business account, and ask them for a loan? They may want some security tho.

Would it be in the Revenue's interest to come to some sort of arrangement? If you stay in business, you will remain a source of revenue for the Revenue, but if you are forced to liquidate, then all they get are the back taxes and penalties? Wishful thinking I know.............


On the subject of who is your accountant or auditor, I wouldn't really rely on them for tax advice unless they have an IATI qualification, or have experience in dealing with the Revenue.

Trying to get the bank to lend you the money may require the assistance of a financial advisor or a broker, again your accountant may not be of much help unless they are QFA or have a history of expertise in this area.

There is a perception that accountants are the solution to all life's problems-not true I'm afraid! Expertise in tax and other financial matters has to be acquired, the title of accountant does not confer it upon us.

CCOVICH said:

There is a perception that accountants are the solution to all life's problems-not true I'm afraid! Expertise in tax and other financial matters has to be acquired, the title of accountant does not confer it upon us.

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I have lately recognised that fact, and am in discussion with a financial adviser with a view to organising all finances both the companies and personal.

TBH I should have done this 4 years ago but better late than never.

The problem with repaying the tax man is fourfold.

Firstly they will require a large lump sum upfront

Secondly their interest rates are very high

Thirdly the company will be showing a liability to the tax man on the books for x years (as opposed to a loan from the director) and credit rating of the company will be adversely affected.

Fourthly by loaning the company the money, I can draw a salary up to the lower rate taxband and draw excess as repayments on the loan effectively tax free. Thus lowering future PAYE/PRSI payments.

or at least thats my take on it at present pending financial advice from the financial adviser.


Using a broker makes sense, but I take it the general opinion is that no lender is going to touch me with a bargepole


Thanks

As I have said, your existng Lender (IN) may be your only point of call!! Regardless of what people think of them, they take a sensible approach to such matters. They may/will charge you a higher interest margin but it would be worth it. Good luck, I hope it works out.

BTY, I am not an employee of IN or Broker, but did work in related industry.

CCOVICH said:

On the subject of who is your accountant or auditor, I wouldn't really rely on them for tax advice unless they have an IATI qualification, or have experience in dealing with the Revenue.

Trying to get the bank to lend you the money may require the assistance of a financial advisor or a broker, again your accountant may not be of much help unless they are QFA or have a history of expertise in this area.

There is a perception that accountants are the solution to all life's problems-not true I'm afraid! Expertise in tax and other financial matters has to be acquired, the title of accountant does not confer it upon us.

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An accountant working in practice should have significant experience dealing with both Revenue and banks. He/she sould also have/provide, for the benefit of their clients, access to a tax consultant for more serious tax issues, I would imagine an accountant who could not provide the afforementioned services wouldnt last very long in practice.

I would also say that most people do rely on their accountant for tax advice, & if their accountant is a qualified professional working in practice this is a perfectly reasonable reliance. Taxation services are a basic element of service provided by most if not all accountancy practices.


Regards,

Ikeano

Ikeanoamback said:

He/she sould also have/provide, for the benefit of their clients, access to a tax consultant for more serious tax issues, I would imagine an accountant who could not provide the afforementioned services wouldnt last very long in practice.

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Having spent years talking to other small limited companies and directors a common question is always "What's your accountant like?"

Horror stories of lost paperwork, late returns for clients who pay to have all the paperwork done for them, accountants who make no effort to guide clients on best/efficient practises.

Other favourites asked are "Why doesn't my accountant tell me that doing x,y and z is a stupid way of doing it and I'd be better off doing a,b and c"

An accountant that offers helpful tax advice? Hens teeth comes to mind

Thanks

As with any service, there are the good and the bad, if you are not happy with the service being received then you should vote with your feet and go elsewhere. I would feel that the majority of accountants operating in Ireland would be providing a high quality of service.

People who complain about their accountant are often the same people who dont reply to requests for information or pay enough attention to advice given & comply with revenue payment dates etc.


Regards,

Ikeano

Ikeanoamback said:

..... or pay enough attention to advice given & comply with revenue payment dates etc.

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Ouch Now there is a sweeping generalisation

If the company is doing reasonably well, could you not take a loan out in the company's name rather than extending your own mortgage? That way the interest and costs can be offset against tax.