Demand from Taxman - Very worried!

BoxCleva

Hi folks,
I won't bore you with the full story, so here are the bullet points.

I was self employed for 3 years up until Jan '08. I had an accountant who submitted my accounts to the taxman in year 1. Year 2 and 3 I submitted the tax returns (late) and incurred the £100 fines which were paid.

For the 07/08 year I have recieved a letter today demanding £500 as a guestimated amount of tax that I owe for that year as they still havent recieved my forms back. What they dont say is that they sent the forms to my ex accountant who hasnt forwarded them on to me.

Q1. To say my current financial situation is dire is an understatement. There is no way I could pay them £500 if my life depended on it. I was going to contact them and ask to pay the latest £100 fines in instalments, so you can understand what a £500 tax demand has done to my nerves! Will the taxman consider installments ? Or am I looking at bailiffs / house repossession ?

Q2. The £500 estimate is ridiculous as I made a loss in every year except the middle year where I made £2000. They have said I owe nothing for that year. What can I do ?


Apologies for the disjointed post, but with no one to speak to at the tax office at the weekend I am very worried.

Chocforever

You need to prove there is no tax to pay. I can't quite follow which year is which. Presumably you haven't filed a tax return for 07/08 and now HMRC are guessing the liability in the absence of your self assessment. £500 would seem like a reasonable guess if you made £2k the year before. Anyway, if you made a loss during the last year, you need to file the return saying that and give them proof (ie accounts). One reason they send out estimated returns is to force people to either make a tax payment on account and/or declare the tax payable.

So call them on Monday and explain the situation. File the tax return and accounts as soon as possible. I doubt the position is as bad as you fear, but it does need sorting out.

I wouldn't mention about the notice to file a return going to your ex-accountants. It is your responsibility to file the tax return and it won't help your case.

BoxCleva

You have deciphered my post perfectly Choc! Thanks

The year is 07/08. I did submit but there was an error on the form, which they sent back to my ex accountant. She hasnt forwarded this on to me.

Do you know if they will accept instalments to recover any monies owed including late submission fees ?

suso

First things first.
call the number on the letter, agree to submit the return (they should allow 4 weeks to receive it)

Then
If there is no tax due then once the return is processed then penalties will be reduced to the level of the tax due. (ie if nothing due then no penalties) BUT no penalties will be reduced or determinations removed until the return is sent in and processed.

So do not think that although you made a loss and don't need to pay tax that you don't need to complete a return.

As for where they got the figures from. If you made 2000 profit in year 2, i guess you paid roughly 400 tax. so without any return for year 3 they are presuming that you made profit of 2500 so are due 500 tax. (approx) They don't know that you made a loss so you need to tell them (via the tax return)

Once you call the number on the letter, then I think they will give you a number of your tax office who will send you the forms, if you call them, ask them to remove any connections to your accountant/agent so all correspondence goes to you.

Once the return is processed and the amount of tax due is properly calculated then there is a time to pay helpline who can negotiate payments. (call the local office and explain and they will give you the number.)

migsy_2

Hi there,

Sorry to deviate slightly from the current conversation but can anybody shed light on how the tax man comes up with their late return penalty of £100 a throw.

Should this not be disputed like we are doing with the banks. How is this random and very round figure of £100.00 calculated.

Just thought I would throw it out there if anybody is interested.

Thanks

Migsy

fengirl_2

Its set down in the Taxes Acts, by government, not HMRC.

mrkbrrws

It's £100 because Section 93(2) of the Taxes Management Act 1970 says so.