what would you do?..tax demands..sole trader

mr_needy

hello world,
i will keep this short as .this is my position..
i am not entitled too jsa,as my wife earns 100 a week..so im told..
i also lost my self employed buissness in oct.(carpet fitter,sole trader)
since i should pay income tax in jan 31st just gone, i find i obviously cannot hence not now working...liability around 2000..and rising intrest etc,late payment....plus another part two payment in july 31st
i also use an accountant..which i now find i canot pay either due too being out of work..the company has no assets..the one asset i did have was a van which conviently was stolen a month ago ..i got 1000 for it from insurance,then payed a little off the 2000 jan payment of tax 500 off,bal 1500 left for jan,..so im doing what i can here...meanwhile i have had yet another self assement form this day sent to me ,from hmrc...and still have too get that filled in..and sent off..i worked only six months in the last taxable period 2008/9.....
heres my questions..
1) i cannot pay for my accountant too sort out my tax(now what)
2) what is my liabilities?
3)do i really owe all this tax,as i thought i paid up front?
4)should i consider bankruptcy.?

RAS

Your first port of call should be to contact one of the Debt Charities; see links below. Their services are free; they have no vested interest to serve; their advisors are professionally trained and the advice they give will be objective and in your best interests only.

CCCS 0800 138 1111 National Debtline 0808 808 4000 Business Debt Line 0800 197 6026 CAB – Contact your local office and ask to speak to a Specialist Financial Advisor. Insolvency Service- 0845 602 9848

In your case the business debtline would be a good starting point.

Tixy

Hello

1) As a sole trader (or ex soletrader) you don't have to have an accountant but you do have to fill in a tax return. You could work out your income, expenses, profit and tax yourself for the last 6months you traded (or if you don't feel very comfortable doing this do you have a friend who is better with numbers/bookkeeping etc).
2) Can't say what your tax liability is until you have worked out your profit from the last 6months trading.
3) Tax is paid as follows for 07/08 - first payment on account 31 Jan 08, second payment on account 31 July 08 (these are estimates) and the balance due 31 Jan 09.

So what you should have paid on Jan 09 would be the balance from 07/08 and the first payment on account for 08/09. Your payment on account is based on last years profits. Because you traded for only 6months you will have made less - therefore you can make a claim to reduce your payment on account for Jan 09 and Jul 09 (if your accountant hasn't already done so)- see this http://search2.hmrc.gov.uk/kbroker/hmrc/forms/viewform.jsp?formId=880

Due to the current 'credit crunch' HMRC are being much more lenient with payments and will probably let you pay your january bill in installments over the next few months. You need to contact them to discuss http://www.hmrc.gov.uk/pbr2008/business-payment.htm


Whenever you contact HMRC you need you Unique number (UTR) and your national insurance number. These will be on you new self assesment form. By the way make sure you store this form safe. You will need it to file the 08/09 return (which must be filed by Jan 10 but can be filed as soon as your accounts are done).

If necessary your accountant will send you copies of your past tax calculations and any tax statements of accounts which may be useful (although they may be difficult if you owe them money)

4) This would depend on your whole financial situation for you and your wife. It is not an easy option and there should be other ways around your problem.

sammy115

Although you can do your own self assessment it is still worth using your account to produce your accounts as they will know of any balancing charges that can be seet against any profits and therefore reduce your tax liability. They can also very quickly estimate your tax liability and ask that your payments on account be reduced.

If your wife is only earning £100 per week if you are not entitled to JSA you should be entitled to working tax credit (well you should if your wife is earning).

edit: I meant to say is it not worth ringing your accountant and coming to some kind of payment arrangement with them.

Tixy

I agree that using your accountant would be a much better option if it is an option. They will help you save tax and make sure there are no errors on your returns (your returns and the accounts can be investigated by HMRC).

Your wife will only qualify for working tax credit if she works at least 16hours pw.

salirip

Try contacting HMRC, they have a special department now for people who find themselves in your situation.

Here's a link with a phone number.


http://www.hmrc.gov.uk/pbr2008/business-payment.htm


Talk to them, you might be able to come to some arrangement with them.