Self Employment Tax Mess

AtALoss_2

Hi,

I've recently closed my business due to lack of business and intellectual property theft. I'm now crippled financially and registered unemployed.

I have unpaid tax bill of about £3k for 08-09 (+£2k on account for 09-10)

I've called the Tax office and explained the situation that I cant pay. They weren't very fothcoming with information as to the process that would occur next, I guess they're keeping that as a surpise (but I have an idea of what's to come).

I've received notification to complete a SA for 09-10 which I'm going to do shortly.

Compared to 08-09 my turnover for 09-10 was greatly reduced and I have unpaid invoices (over £7k owed to me) from the last quarter of business which I cant persue (lack of funds to go through collection/court process re intellectual property theft).

Am I able to deduct the unpaid invoices from my 09-10 SA as a write off/loss and would it also deduct from my previous 08-10?

I'm not hugely clued up about Self Assessment and cant afford an accountant, any advice would be massively appreciated!

Rolo_Tomasi

The first step is to make sure that you spoke to the Revenues business payment support line and not just the call centre which deals with your tax district. They are much more sympathetic.

You then need to prepare the accounts for the final trading year to determine if you have a tax liability for the 2009-10 tax year. The invoices not paid will be included as an expense in these accounts and will therefore reduce your taxable income. Remember that the invoices will have to be included as income as well as an expense and you can only claim the write off in the current year. As your business has ceased it will also be able to claim 'balancing allowances' and also overlap relief if your accounting date was anything other than 5th April.

If the business made a loss in the final year then you can apply to carry this loss back and set it against the profits made in the earlier year, thus reducing the tax outstanding.

I realise that it is an extra expense but I do strongly advise that you go to see an accountant as they will ensure that you claim all of the allowances due to you and will probably cover their fees by reducing your tax bill.

kickwhamstunner

If you really want to get revenge, tip off the taxman that you're writing the debt off as irrecoverable. This can then be counted as income for the person who's not paid you, thus causing them to pay more tax.