Tax debt advice please

bruciebounus

Hi, i'm trying to see if anyone has any advice to offer me. My partner is a black cab driver and has just been sent a tax bill for £50,000. There is no way that we can afford to pay this, and what we can afford to pay doesn't even cover the interest that is accruing. Is an IVA an option? He doesnt have any other debt apart from this tax bill. Or how about bankruptcy, he has no assets, but would he still be able to drive his cab? Any help would be greatly appreciated.

Beast

Surely HMRC will let you form a payment plan over several years rather than asking for 50k in one go?

ladybez

The first thing that I would ask is; Is the bill correct or does it cover arrears from previous years. Not sure about IVA or Bankruptcy though, some one more experienced will be aloing soon. But I would check the figures.

bruciebounus

Beast wrote: »

Surely HMRC will let you form a payment plan over several years rather than asking for 50k in one go?

Hi Beast, my partner did have an agreement to pay a certain amount back each month based on what he could afford, but because of the interest charged he wasn't even scratching the real debt, just the interest.

ladybez wrote: »

The first thing that I would ask is; Is the bill correct or does it cover arrears from previous years. Not sure about IVA or Bankruptcy though, some one more experienced will be aloing soon. But I would check the figures.

I think that the bill is an estimated one and covers previous years. Because of my partners atrocious book keeping record he does not have the records to prove the correct amount, and I think in that case the HMRC can calculate what they think he owes and he cant dispute it.

Tixy

Is this just his normal tax bill (allbeit assessed by HMRC) or did they actually do a visit, decide his income was higher than he declared and say he owed this in back tax?

Does he have an accountant? Has he/or someone been preparing accounts and filing a tax return each year? how long has he been a cabbie? does he own his cab?

He might look for advice from businessdebtline (which is free).

bruciebounus

Tixy wrote: »

Is this just his normal tax bill (allbeit assessed by HMRC) or did they actually do a visit, decide his income was higher than he declared and say he owed this in back tax?

Does he have an accountant? Has he/or someone been preparing accounts and filing a tax return each year? how long has he been a cabbie? does he own his cab?

He might look for advice from businessdebtline (which is free).

Hi Tixy, as far as i'm aware it's just a normal tax bill, he's never had a visit or anything like that, just letters through the post. The bill is a result of not paying his taxes for a while. He doesnt have an accountant or filing a tax return (I know its his fault he's in this mess). He doesnt own the cab but rents it and I think he has been a cabbie for around 14 years.

Thank you everyone by the way, for your replies.

Tixy

Well unless he can produce accounts for the missing years then he cannot prove that the bill should be lower. They will have also heaped on fines for failing to file tax returns, and of course interest.

Roughly how much does he earn a month after business expenses? how much can he afford to pay towards this debt each month? how much was the agreed repayment he was making?

Is he now keeping proper records?
As a minimum he needs a list of the amount of takings he has every day and a list of any business expenses each month.

Tixy

Do you have any joint financial products (loan, overdraft etc)? assume he rents and is not a homeowner?

I would think bankruptcy may be a viable option for him. But he needs to seek advice on this before he can decide.

Would he be likely to get work as an employed cabbie and if so how much might he earn?

Fonz_2

Is it actually that easy? Don't pay any tax for years, go bankrupt, wipe it all out, start earning again like nothing happened?

It cant be that simple?

bruciebounus

Tixy wrote: »

Well unless he can produce accounts for the missing years then he cannot prove that the bill should be lower. They will have also heaped on fines for failing to file tax returns, and of course interest.

Roughly how much does he earn a month after business expenses? how much can he afford to pay towards this debt each month? how much was the agreed repayment he was making?

Is he now keeping proper records?
As a minimum he needs a list of the amount of takings he has every day and a list of any business expenses each month.

Hi Tixy, it really depends day to day how much he is earning, but as an estimate he is probably left with around £1500 (from which he needs to pay child support/house rent and income tax from). He had agreed to pay £200 per month towards the debt but like I mentioned that only covered the interest.

Tixy

Fonz wrote: »

Is it actually that easy? Don't pay any tax for years, go bankrupt, wipe it all out, start earning again like nothing happened?

It cant be that simple?

No, its not, going bankrupt is a difficult decision and never an easy option, he would be registered as having been bankrupt and will have to declare that if asked at any point for the rest of his life.
Its possible he will only be bankrupt for a year (though it could be longer) but would still need to pay a proportion of any surplus money (earnings less basic living costs) into an IPA for the next 3years (if the OR assessed he has any surplus money that is).

And it will wreck any chance of getting credit for the next 6years.

So not simple, but possibly an option.