can't pay my income tax bill, advice very much appreciated!

pencilcase

a bit of background - I'm self-employed, things have taken a turn for the worse and I'm now £55k in unsecured debt and have a 4K tax bill to pay. My current income is about £12K and may drop off at any time. I don't own property or have any assets.

I know that in my circumstances, bankruptcy would be a sensible option, and maybe it would be in the long term, but I know it's a major step and I don't want to be rushed into it. I'm aware that the revenue can make you bankrupt for unpaid taxes, and I'm concerned that they might do this sharpish if I don't make large payments (which I'm not in a postion to do) pronto.

If anyone has been in this situation or can offer advice on how fast things move along, how open they are to negotiation etc. - Also, when it comes to offering them money - I don't know how to proceed - my other creditors are accepting £5 token payments without too much fuss at the moment (ie, I get the letters and some calls, but no heavies round to the house). But obviously the revenue are going to want more than that, which I can't offer at the moment... am trying to get more work, or a regular job as my self-employed work isn't going well, but not sure how long that process will take. How patient are they?

Though having said all this, maybe if they do force me into bankruptcy (which would have to be done as a 'punishment' measure rather than to reclaim money... cos I don't have any....) it would at least take the decision out of my hands. But then again, as I say, I don't want to be rushed into it.

Sorry to ramble - any help appreciated!

BlueIsTheColour

Sorry am not much help, but all I will say is make sure you keep in regular contact with them, and stick to what you say you will do, otherwsie they will take you to court pretty damn sharpish for CCJ.... They have recently done this to someone I know, despite him paying them £500pm and being a financial advisor, which means he cannot now practice......so can't earn to repay them, so their logic isn't always the same as "normal" peoples....

pencilcase

That's very scary! I wonder how fast it'll happen - because if they don't give me a couple of month's grace to try and find new work, that's it!

BlueIsTheColour

I think it took a few months for that to happen as they were trying to negotiate and explain to HMRC that if they pursued the CCJ, he would automatically lose his job, but due to downturn in mortgage market etc he could no longer afford the £500pm, as his income was seriously reduced, they weren't bothered and pursued it anyway, getting judgement before Xmas, so now he has to find a new job!

Not that his experience should worry you but its an indicator of who you are dealing with.....

Good luck

belfastgirl23

I have always found inland revenue to be very helpful when I've had to deal with them so if it's income tax I'd say the first port of call should be to talk to them. They will ask why you didn't put money aside though so be prepared for that question. Seawyxn also posted this on another thread:

Quote:
This year HMRC are allowing people to pay in instalments if you can't pay the full whack in January. They do charge 7.9% interest though. See http://www.hmrc.gov.uk/pbr2008/business-payment.htm - I phoned the number half way down that page and they were very sympathetic and helpful and they are letting me pay in six instalments. So they may well agree to let you pay in Feb, or whatever would suit you better.

However if it is the VAT people I have found them to be a NIGHTMARE and would say you should get proper advice before you start to deal with them

Good luck!

sammy115

Is the money you owe them just for last years earnings ie balance to pay as at 31st January or does it include payments on account for next years accounts.

If it includes payments on account and you think your income is going to drop then you can request that they reduce your payments on account to what you expect your earnings to be.

I find if you keep in touch with the IR they are sympathetic and have been known to accept monthly instalments. However, they do impose a penalty of 5% of any balance outstanding at some point in Feb.

I do get quite cross at this situation as you have earned the money and you did know that the money was owing. I realise things are tight but you must not think of any money coming in to your business as 'yours' - you must deduct about 30% of any money coming in to your business before you allocate it as disposable income.

sammy115

BlueIsTheColour wrote: »

Sorry am not much help, but all I will say is make sure you keep in regular contact with them, and stick to what you say you will do, otherwsie they will take you to court pretty damn sharpish for CCJ.... They have recently done this to someone I know, despite him paying them £500pm and being a financial advisor, which means he cannot now practice......so can't earn to repay them, so their logic isn't always the same as "normal" peoples....

Being a financial advisor he should have known better. I am sorry and I am not normally quite so vocal on such matters I know things happen sometimes, but again a financial advisor must have known how much he should have been putting away to pay the IR at the end of the year.......

belfastgirl23

I did find them unsympathetic about the fact that we hadn't put enough money aside, although in our case there was a good reason (over two years his tax liability was a lot less cos earnings varied and I hadn't realised you had to pay the tax up front and then reclaim it). Once I explained and said that we had put money aside, just not enough, they were nicer. Although we still had to pay the fine....

louietudor

sammy115 wrote: »

Being a financial advisor he should have known better. I am sorry and I am not normally quite so vocal on such matters I know things happen sometimes, but again a financial advisor must have known how much he should have been putting away to pay the IR at the end of the year.......

lecture over?? dont lecture people people on what they should or should not do - you do not know the whole story - do you think people are thick and dont know what SHOULD be done - you do not know the whole story of why people get into such a mess and therefore your should not commnet on the rights and wrongs just on the solutions - this forum is for support - please try to remember that when find your self having to be 'vocal;'

SouthCoast

"In this world nothing can be said to be certain, except death and
taxes."

Benjamin Franklin 1789.

pencilcase

Many thanks for the help on this thread - that's a very helpful link, Belfastgirl.

Martin says on one of the stickies on the forum that this is a forum for practical suggestions, not judgement and that these issues, though important, are more suited to discussion on the 'discussion forum.'

Thanks again

Pencilcase