Tax dilemma

aussie7

Hi,

My housemate has a tax dilemma.

She (like me) is an Australian living and working here on an ancestry visa. We both started working in London in September 2006. She works through an umbrella company (Futurelink??? I think?) and got the accountants they use to do her self assessment for the 2006/07 tax year (didn't work out to be all that much, she owed a couple hundred pounds I think)

However, now she's worked a full tax year, she got the same accountants to do her assessment for 2007/08 tax year, and it was £5,000! On top of this, they said she has to pay an extra 50% for payment on account for the 08/09 tax year

So, upwards of £8,000 is a lot of money and she doesn't really have that at the moment. She told the accountant not to bother submitting the return to Inland Revenue, she'll take care of it herself. But now she's contemplating not even submitting it to see if she can get away without paying... she's planning to stay and work until the end of 2010 as well. She says that NI contributions get debited from her bank account on a regualr basis and is worried she might be tracked this way...

Anyone heard of similar stories? Any suggestions or advice?

Thanks

whitewing

Are you seriously asking on a British website what we think about your housemate not paying her taxes?

What do you actually think we'll advise?

aussie7

Well I'M telling her she should do something about it... but she seems to think she could get away with it. But I can tell she's worried about whether they can track her etc

Obviously we're not experts so just wanted to find out some more info on the topic that's all

whitewing

Tell her that someone will report her. I'd do it myself tbh. It's one thing making a mistake, and quite another to deliberately carry on working her with no intention of paying her taxes. I suggest you don't get involved as she will probably land you right in it. Does she owe you money if you're house share? Personally I wouldn't get involved with anyone so devious.

aussie7

Yeah, I know what you mean... how can she get reported? And by who? That way, I can tell her this and it might kick her into action

No, she doesn't owe ME any money. She's still working so can pay the bills etc... just doesn't want to part with the £8,000. Is there some way she could pay it in installments? That might make it easier

fengirl_2

As your friend is already in the self assessment system, she is known to HMRC and they will not give up on her. If she fails to submit this return, she will be liable to a penalty of £100 and HMRC will then estimate her liability. They will then persue her for the estimated liability, plus interest. The only way to overturn an estimate is to submit a return, so there is no way out.
I suggest she tries to negotiate payment by installments.

aussie7

Thanks for the advice - I'll be putting this in front of her tonight! I'd say she might have to settle with installments - do you know over what time period it can be paid?

What if she moves house (another one of her ideas) and doesn't notify a change of address with HMRC or her umbrella company etc? Can she still be tracked down through her bank account?

fengirl_2

If she moves house, how is she going to maintain herself? if she works, she will have to give her employer her NI number and she can be traced by that. Why am I bothering to answer questions regarding someone who thinks they should not contribute like everyone else?
IF HMRC are to agree to payment by installments, she will have to produce an income and expenditure statement to show how much she can afford. However, I have to say that collectors of taxes have very strict guidelines as to what they can and can't accept - their view is that you have earned the money and should have provided for the tax. They, in turn, have the National Audit Office on their backs, ensuring that as much tax as possible is collected at the right time.