Starting self-employment again. Owe £30K to IR. What do I need to do?

Frank_Martin_2

This is fairly unusual one, as far as I can tell. For four years between 2002-06 I was self-employed. My last year, I had a rough time and lost a lot of money. I ended up owing the Inland Revenue about £24,000 (I think it was, at the time). I didn't use an accountant, and did all the self-assessment forms myself.

I then left SE and returned to full-time work, albeit for a lot less money. Despite me putting this on my self-assessment form, the IR, in their wisdom, continued to assume I was still working SE and rolled-over my next year's monies (in advance) as they do, and even though I've paid tax for a couple of years now, my bill is up to about £30,000. I'm sure I can contest that with a good accountant, but that's not really my issue right now.

This is my problem. We started paying back some of the money in 2006 - about £5,000 of it - but couldn't maintain a payment plan. They threatened us with bankruptcy, and even issued a statutory notice, but nothing ever came of it. They continued to send me statements in the post, every month or two, but that was it. I haven't made a payment against my arrears since then (about 18 months).

About six months ago, I got a letter in the post from the Revenue addressed to 'The Occupier', that was asking for my details, where I'd moved to, etc. I hadn't moved anywhere.

After that, I continue to get regular statements. Everything else to do with the IR/customs comes to my house - i.e., child tax credit - and these forms are completed and returned. I've always sent back my self-assessment on time. And as said, I'm a regular taxpayer - they could enter my NI number into the system and see I'm still here and paying tax at any time! For some reason, they seem unable to do this.

Here's my problem - I've recently secured a very, very good position in the City but I have this IR thing hanging over me. Even if I can somehow manage to squeak through any potential checks my new firm will do - and, looking at my recent Experian report, nothing from the IR is listed on there - the fear of the Revenue suddenly bankrupting me out of the blue is obviously a clear and present danger.

My main concern is I'll be working as a consultant and everybody and their uncle is suggesting I set this up again as a self-employed business. It makes sense financially, but I'm mindful as to how this is going to look to the Revenue.

If I suddenly start making fairly significant monthly payments back to the IR in an attempt to clear this debt in the next 5-10 years, can I do this in any way (i.e., through a solictor) where I am protected from them coming down on me hard and fast?

Am I better off being paid through PAYE and writing off the monies I could have saved on tax. I mean, am I taking the !!!! by setting myself up as a consultant to save on my tax bill when I owe so much, or does the Revenue never think that way?

Is there anyway to pipe the debts already owed through a new limited company, and somehow protect myself in that way?

Really, my main concerns are to do whatever I can to not risk losing this job. I realise that sounds like a bit of a pipedream and I accept I've dug my own hole here, but the fact that the IR seems to almost be waiting for me to do something is both confusing and slightly unnerving me. Is it possible they've somehow assumed I've been intentionally 'slumming it' these past couple of years with a lower-paid job, and are waiting to 'attack' if and when I go back to my previous level of income?

And if so - why? Surely their best bet would be to then ask me to make regular and high payments, as all bankruptcy would do is get them nothing. I have no assets - we rent our home and I don't own a car. I've often wondered if they've not moved further on this simply because they have zero to gain, and everything to lose.

I realise they operate in mysterious and sometimes self-destructive ways at times, but this entire situation is just so odd.

Thanks for any help.

gwinnie

Ultimately, the IR just want those taxes paid. As for the odd procedures, they are a huge and unwieldy organisation and the wheels turn slowly. I think you should just get yourself a good accountant, work out a realistic repayment plan and re-open negotiations with the IR. And when it comes to those credentials checks for your new post, surely it is better to have a documented agreement with IR in place than an outstanding debt?

Frank_Martin_2

Yes, you're certainly right there. The thing is I won't be able to afford to make anything over than a very nominal payment until I begin this new job.

My main concern, as said, is protecting myself as much as I possibly can. I'm also wondering if a 'rob Peter to pay Paul' stance is the best way forward here - that is, send as much money as I can to pay off as much of this arrears as possible until January 2010 (which will be the first time this new career shows up on a self-assessment form) and then worry about the taxes I own for *that* year later.

That's 15 months. I've worked out I could have paid off almost £19K by then from the arrears. Of course, I'll simply be moving numbers around, as I then won't have the funds to clear my 2008-09 tax obligations, hence the Peter/Paul thing, but if I can buy myself time, that's all that really matters. And any bonuses that come my way in these next 15 months could potentially clear everything, and my 08/09 tax, too.

What I don't want is to re-open negotiations with the IR and them to then immediately bankrupt me as soon as I start paying lots of money back. This will almost certainly lead to me losing my job, but from their point of view it will mean they'll lose any chance they've got of me clearing this debt, too, which would be madness, but I understand that's how they work sometimes.

Does anyone have any advice on how the best way I can protect myself from the worst happening (rather than just paying back what I can)? Is there a way to work this through a new ltd company, making it a business as opposed to a personal debt?

maxmycardagain

go BR,wipe the slate.

new start

the IR will hit you with a CCJ, and up it thru a charging order to a sec loan, maybe even go for repo if you have property with equity, they have no heart other than ones of stone

skylight

There is no way to protect yourself, barr paying off the debt in full.

HMRC are not usually seen as generous or patient! As mentioned, they are a large organistation and the wheels turn slowly. They are one of the few who WILL make you BR if they chose to.

If bankruptcy really will lose you your new job (is it a regulated job in the finance industry then??) then getting a good accountant to go through everything with a fine toothcomb and coming to a repayment agreement really is the only way. As long as you pay up and on time as agreed, HMRC will not suddenly BR you.

Otherwise, go BR and wipe the slate clean.

Murtle

As mentioned start with an accountant and work out what your options are. If you go bankrupt now this sounds like it could not only loose you this job, but future ones too depending on the area you consult in.

A good accountant will help!

Good luck

Frank_Martin_2

Yeah, going BR is not an option. That's what I have to avoid, pretty much at all costs.

As said above I don't have any assets, and rent my property etc, which is I think one of the reasons why they haven't pursued bankruptcy and have, for all intents and purposes, left me alone. My gut feeling is they're waiting for me to return to the 'big money' days, which is what I'm on the cusp of as we speak.

I think my best plan is as I said - to pay off as much as I can over the next 15 months, probably through an accountant or solicitor, ahead of my January 2010 (2008-09 financial year) self-assessment return. That will leave about two-thirds of the debt cleared.

maxmycardagain

so get ready to feel the full force of the taxman, he makes the grim reaper look warm and inviting, they dont wait for money, they take it

Frank_Martin_2

As I've said, they've waited over two years so far, including the past 18 months without me even sending them a penny (outside of the monthly amount they get from my PAYE).

It's all very strange. I realise they operate in mysterious ways, but they do seem to be waiting for me to do something (i.e., go back to the big money).

maxmycardagain

you can always take the new big paying job, keep paying your PAYE and send them as much as possible to pay aginst the money owed, they may look kindly on you, it also changes week by week the amount owed and confuses them.