Massive tax problem ... please help

katieowl_2

My DH has been investigated twice in the past ten years by the IR because they "Do not believe he earned enough to live on" (Don't laugh money savers - it's true) Very much as Wassup says, they thought DH, as he is in the building trade, was stuffing handfuls of notes into the mattress (NOT true).

I fail to see how a massive cash in hand income could just dissapear on 'having a good time' there would have to be a trace. We were asked to provide personal bank statements, pasports etc. I provided a list of how we lived on our pitiful(!) income which made both of us take a step back and thing God we need to get a life! Most people who are earning, have "Stuff" I think you would be in a pitiful physical state if you spent the sums that seem to be being inferred on 'living it up'!

For what it's worth we fought tooth and nail both times and they backed off. DH and I fought it side by side - I told him I hadn't fed the kids baked beans for a year to be told I was living high of the hog! We were in the enviable position of KNOWING categorically he had done nothing wrong, so I was prepared to make a lot of noise in our defence.

The First enquiry went on for some two years, we finally responded to a radio request from the BBC for small business men that were being harassed by the IR - and I had Rory Cellan Jones and a camera crew in my kitchen a week later, and the story was on the news three times on the following day. The IR backed off immediately, the tax inspector on our case was 'moved' with in a week to another office, and the new inspector sorted it immediately and within a month the long awaited rebates started to come through the letterbox. We had an accountant at this time, and I think that the allowances he tried to claim for DH in part made the IR think that DH was trying to 'lower' his income in some way, and of course the IR are just institutionally professionalist against the building trades. The Inspector we had thought DH was a thick Irishman because of his name, and didn't occur to her that he was probably more highly qualified than she was (he has an MA in fine art) and that he was in the trade because he couldn't find an art job. I hope she enjoyed her 'new' department and that one day she looses HER job and has to live on Baked Beans :rotfl:

The 2nd time was only resolved about a year ago - again that took nearly 12 months, and eventually, although he decided to take issue with the way the calculations of work in hand were made he had to back down and accept that the figures were correct. Since the first investigation we do our own books. Firstly because we can't AFFORD an accountant, and secondly so we know the submission to IR inside out. We don't claim any fancy allowances.
In this last investigation we took some advice from the TAX AID people and they were very helpful. The added 'fun' of the last investigation, was that if they came up with a different set of figures to us, that it would impact on the Tax Credits we had recieved, and as we had had trouble with that anyway....lets not even go there.

As we have just had to ask them to reduce this years Tax bill - as the income is down again, we are just WAITING for the next 'investigation' to come our way.

I say if you know you are right FIGHT!!! Don't let them get away with the bullying tactics they try. If you know that there is something you haven't declared that they may find if they poke about some more...well that is a different matter. I am a firm believer in honesty being the best policy, it makes life simpler!

Sorry to write a book, but I hoped this might be of interest to anyone in a similar position.

Regards

Kate

tawnyowls

Wassup, I echo the sympathies of everyone else.

First thing to do - get in touch with the Federation of Small Businesses (https://www.fsb.org.uk). If you're not already a member, it'll cost you £100 to join; lot cheaper than a solicitor, and that entitles you to free legal advice. The FSB reckon that they make the IR either drop altogether or settle for a lower amount in over 70% of the cases they take on.

They should also be able to recommend one of their members who's a professional accoutant/tax specialist, because I agree with earlier posts - whoever your 'agent' is, he's not helping much. You need someone else to take over - if nothing else, it'll give you (a) a second opinion and (b) a fresh mind who will have an objective view on the case without past history clouding his judgement.

Best of luck!

shays_mum

Wassup, maybe another of our members can help. I have posted their intro, the rest is up to you. You did mention that there have been no winners here, well my dad had 2 different IR guys in his business everyday for months trying to catch him out. They wanted a MASSIVE sum from him (a 5 figure sum), in the end they had they settled for a paltry 4 figure amount, after his tax accountant stepped in. All in all a success i think.
Anywho this is the person i mention earlier: HTH & Goodluck

Chartered Tax Adviser
Hi all

Just wanting to introduce myself.

As a gesture for all the valuable help this site has offered me in the recent past I thought my knowledge in this particular area would be of use.

I am both a Fellow of the Chartered Association of Certified Accounants (FCCA) and a Chartered Tax Adviser (CTA) and have my own firm of tax consultants based in Bristol.

I intend to help out wherever possible in this board.

Just to note all advice is offered based on information supplied and is therefore general in nature. I can offer specific advice if people wish to contact me off -board by PM in first instance.

Duane

Solar1

Wassup

I have to ask . You said earlier in the thread today that

'there was a large amount of cash unaccounted for, which i held my hands up to. But what the ir are doing is saying i earned it all in one year, which i didnt, it was earned over 3 years'.

Do you have proof of when and where you saved this cash to accumulate it as clearly this would support your case of when you earned it and perhaps work in your favour.

Even if your figures are correct and the tax due is £15000, we are still talking about a lot of cash ( well in excess of £60000) which is a lot of money to not to tell the taxman about, even if you did earn it over 3 years.

As regards paying up if you have already put your hands up to this figure then it is hardly surprising that the taxman expects you to pay now. Would you be able to secure a loan on your property?

merch

post 1 wassup

I've got a massive tax problem going on and wondered if any of you can tell me what to do.

post 33 wassup

I didnt ask for advice... i asked for other peoples experiences in this situation

wassup

Solar... the black hole in my finances is £25k. I didnt earn it, it came from another source but I can't prove that, so I'm willing to pay tax on it. I was hoping the ir would play fair and say it could have been earned in the 3 years prior at say £8k per year over what i accounted for. If they did that then my tax liability would be say £2.5k per year multiplied by 7 years, around £15k.

I shouldn't be paying any tax at all on it, it wasn't earned.... but thats another long story which I'm not going in to.

What ir are doing is first not believing it came from another source, and then saying it was all earned in one year, and then assuming same happened every other year.

Merch you are right and I apologise... but I didn't come on here to get even more grief and stress.... its bad enough as it is.

I've had some good ideas from some posters and I might take some of them up. Thanks very much.

nrsql

You get £25k unearned from an undisclosed source and you expect the IR to kindly view it as earnings over the previous 3 years which you hadn't disclosed?

Think I'm beginning to see why your agent feels you should pay up.

I suspect their argument is that they have found £25k income in that year which you have hidden and so it's not unreasonable to assume you had been trading in a similar way in other years. It's probably up to you to prove otherwise - maybe the problems are caused partly by a lack of openness. Don't know whether it is possible to correct that but from other posts it sounds like it may be possible.

If it's true that the IR inspector and your agent have a history then that won't help - especially if he has not represented people honestly in he past.

Changing accountant may be an excuse to get them to review the case.

wassup

nrsql.... I appreciate what you say... and thats why my first inclination was to just pay, seeing as it's for me to prove otherwise.

However the point of starting this thread was to see what ohers thought.

All I can say at the moment is I know that the bill is too high for the amount I've earned. I'm having to sell my house to pay it as I dont have the money to hand.

So should I just pay up and learn to get over it or keep fighting on. My own mood swings between one and the other about every 10 mins.

I reckon for the sake of my health and my wifes I should just pay.

btw the amount was not hidden. The amount was in the year following the year of enquiry. They asked questions at interview and I told them about it then, that was 3 years ago.

nrsql

Then that sounds a bit odd.
I'm surprised that they are trying to impose punitive charges for an assessment that is based on something you disclosed rather than they found.

Personally I would fight it. I think that people should pay the "correct amount of tax" (as Gordon is fond of saying but not meaning) but see no reason to pay more.

The question would be whether your accounts can stand up to further scrutiny.

Solar1

I supose it would depend on the questions they asked before you disclosed it, but never the less the fact that you did disclose it should account for something. What reduction in penalties have been given for this?

Also you say that you cannot prove where you had the money from but can the source who paid the money out prove that it was given to you and was not earnings. This is no time to protect anyone unless of course they are going to stump up the money to pay your bill.

If you go along the route of not being able to provide details of how you obtained the money then the IR can and will go down the route of assuming you earned it and will charge you tax on it. Also they will contend that if you did earn it then it could be assumed that you earned similar amounts in other years. Really you should pull out all the stops to prove where the £25k came from, thus weakening the IR's case.

If you disclosed this 3 years ago why has it taken so long for them to come up with figures. I think you should definately ask the question to the taxman and probably their boss, as well as your agent. Incidentaly what led your agent to believe two months ago that he bill would be £15,000. He must have had some discussion with the taxman to arrive at this figure. Have you asked him?

Ask the right questions and you will reduce your bill.Good luck.