HM REVNUE AND CUSTOMs?

are helding my friend for 拢4 million pound , they are going to arrest him tommorrow.

he is the director of some company called dorval limited in wolverhampton, he became the director of the company on 9/9/07

the 4 billion tax hasnt been paid since sept 2005 so why is my friend being liable

what are the possible rights that he may have to deal with this situation.

the owner of dorval limited whom actually hasnt been paying for the tax has ran off to india with his son,

so help

Dear me, it looks unpleasantly like your friend has been set up - there is no way one should become a director of a company without being fully aware of its financial situation. The directors are all (as someone has said) liable for any debts, so as other directors have fled the country, your friend is being left tot ake the rap. That's gonna be a very expensive and unpleasant learning experience for him.....

Perhaps a solicitor can help him!

If your friend is the director of the company, then he is responsible for ensuring the tax liabilites are paid. As they have obviously not been, they are taking action against the company owner. The company is obviously doing well to have a tax bill that large so why doesn't he just pay what is owed??

If he is a director of the company then he is jointly and severally liable. He should not have agreed to be a director of a company where he was unsure of the current spendings and tax situation.

He can try pleading ignorance, but that is unlikely to work. The will argue that you shouldn't become involved in something you don't understand.

However, he needs to speak to a tax advisor urgently and possibly a corporate solicitor to get a better feel of what to do.

Not sure what planet some of my fellow answerers are on, but the whole point of a limited liability company is that the liability is limited. If it has debts that it cannot pay then it will be put into insolvent liquidation. That's the company, not your friend. He's not jointly and severally liable or anything like that - what a load of nonsense.

So your friend is not liable for the debt in the sense that he, personally, now owes HMRC 拢4m.

He may, however, be liable for various offences relating to its non-payment:

A director can commit an offence if he has been negligent or fraudulent in his dealings. For example, say there had been enough money to pay the tax but instead of paying it he voted a dividend to the shareholders or a bonus for himself. Or say he knew that the company was insolvent, but covered it up and carried on trading. It is also possible to commit crimes such a fraud by using the authority of your position as director of a company (e.g. writing yourself a big fat cheque from the company when you have no right to the money). And in general, a directorship is a position of responsibility and there are various company law requirements that you must comply with. Not much point listing them all without more information about the circumstances.

The first thing he needs to do is to get himself a lawyer. Then be prepared to discuss the circumstances under which he took on the appointment of director, because HMRC will smell a rat here (didn't he do ANY research before taking on responsibility for a company that was probably insolvent even back then??).

Then he should be be prepared to explain and justify every decision he has made on the company's behalf since his appointment. For example, why did he carry on trading when he should have known that the company would be unable to pay its liabilities as they fell due? (I assume the reason it's not been paid is because they cannot pay.)

What a director does is manage the company. If he's trying to say he had no idea that there was this debt, or that he didn't know what to do about it and so he did nothing, then he sounds incompetent at best. That said, if it turns out he has done nothing "wrong", then he will not be in any trouble.

Separate from the issue with the police, he may get struck off as a director (i.e. he will be prohibited from taking on directorship of any company for X years).

If he just forgot to pay it, or if there's an argument over whether the tax is due or not, then he needs to take action and the whole thing can be sorted out. Sounds like there is more to it than that though.