Old Income tax Help!

outdriveman

Hi

Is there anyway of reducing an Old income tax bill?

My girlfriend is a self employed cleaner.
She has a income tax bill for a total of £2700
Reading her statement it says

Balance bought forward from previous statement £1024
31 Jan 07 Determination for Tax year 05/06 £258.70
31 Jan 07 1st payment on account due for year 06/07 £500

31 Jul 07 2nd payment on account due for year 06/07 £500
15 Nov Interest £63.86
Amount to pay £2349.60
This is the only statement she can find and it is dated 15 Nov 2007
We have spoken to them in May this year and they have told us that she owes £2700 including fines etc. At that point I asked if it would be possible to pay in monthly instalements which they refused saying she had to pay the full amount straight away. Needless to say we did not have the funds to do this and have not spoken to them since. We are desperate to clear this debt.

Thank you in advance for any advice given

Steve

hopon

Why are their determinations showing on the statement? Is it following an enquiry or has she got outstanding tax returns to submit? The first thing would be to do those so you can see what the actual liabilities should be.

outdriveman

Hi Hopon
Thanks for your reply it is much appreciated.
What is ment by determinations?. I beleive she has no outstanding Tax returns but this bill is from a while ago and she cant be 100% Sure and she has not made any enquiries before that statement.

Merlin_Accounts

A determination is issued by HMRC in the absence of a completed Self Assessment tax return where one was issued for completion. From what you show it is clear the 2006 Self Assessment tax return has not been filed.

You can change the amount determined by HMRC by filing the outstanding tax return, there is no other way.

It also looks like she has not filed her 2007 tax return either. The payments on account are currently being set by the value of the determination.

The penalties incurred for late filing cannot be quoshed except in very mitigating circumstances. They could be reduced if her actual tax liability was less than £100 each year (unlikely).

Interest and surcharges can be changed if the outstanding tax returns are filed, but clearly she needs to be making payments to HMRC - the due dates are always 31 Jan & 31 Jul (unless tax bill less than £500 when it will alwyas be due in full on 31 Jan).

There is one possible get out from this - you say she has filed all her tax returns (she has copies no doubt to prove this?). Sometimes HMRC accidentally set up more than one file for a self assessment taxpayer - check the reference number on the statement to see if it is her number.