The question of how bad dividends can land a limited company director with a personal liability to HMRC is worth asking, because it goes against the grain of what most people regard as a key motivator to having such a business, writes Matt Fryer of Brookson.
The status quo of LTD
One of the main reasons that a contractor considers setting up their own limited company (in addition to the perceived tax benefits) has always been the concept of limited liability.
In its simplest terms, the liability of the director (who is generally the majority shareholder) for a companys debts is limited to any amounts that remain unpaid on their shares in the company, and they are not liable for a companys debts in certain cases. This means that their per…
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