Ending business partnership on bad terms - how to pay revenue commissioners

[johnnybegood]

Hi all,

A friend of mine is involved in a business partnership with one other person. The business is not working out and they plan to close at the end of this month. The problem is however that the partnership will owe VAT and Paye of approx €10k. My friend is willing to pay her €5k but the other partner is of the view who cares they can whistle for their money (not a very intelligent approach - I know)

Unfortunately my friend didn't realise this would be the type of business partner he would be dealing with. What should my friend do? I have advise to make sure the partnership is deregistered including all taxes VAT, PAYE, IT and obtain final balances owed to revenue. Could he send a cheque personally to the revenue for 50% of the liability or will it be deemed to be a dispute between two individuals?

Any help would be much appreciated.

Johnnybegood

 

[mathepac]

Your friend needs to talk to their accountants as it sounds like there are no funds in the business.

The Revenue can and probably will pursue both partners for the full amount owed, irrespective of who pays what at this stage.

Are they both 50/50 shareholders in a limited company or is there some other legal entity they operate?

 

[johnnybegood]

Hi, I am actually a practising accountant and was more concerned from a legal point of view. They operate as a partnership (Not limited).

They are fully committed to ceasing the trade, preparing the cessation accounts, submitting any outstanding tax returns (both for the partnership and personally). The issue is if one partner wishes to pay the revenue and the other does not, can the partner that wishes to pay them do anything about this? I.e. Can they pay their share and legally what would be the implications etc.

The fact that there is no funds in the business is the driving force to the decision to close shop. They tried and failed and they have accepted that. I don't see how that affects the question I asked as again they are aware that the business has a liability regardless if it has the money to pay that liability and as it is a partnership whereby there liability is unlimited the debts of the partnership are their responsibility but if one person has an attitude of not giving a damn and another does not is there anything a person can do about that?

 

[contemporary]

i cant condone this but if they closed the doors and submitted nil returns would the revenue be any the wiser? thats how a lot of the phoenix cowboys operate

 

[dereko1969]

i would have presumed they were jointly and severably liable, revenue can go after either to get the money back.

 

[johnnybegood]

Contemporary, I would strongly advise against that type of action. If they were to get a revenue audit then that would invariably result in a much worst situation.

Dereko1969, you have pretty much backed up what I thought. This person foolishly trusted this person and as they were a legal business partnership its up to the two of them to repay.

Its a bad situation though if there is no option (such as appeal to revenue) for the partner that wishes to do the legal thing and discharge the liability than the partner that wishes to ride on into the sunset!!