Owe taxman money from being s/e now opened a ltd company

MattWebb_2

Hi,

Wondering if someone can help us out please.

I am currently a taxi driver on a self employed basis and have been for approx 2 years and haven't been to see the accountant.

I have now opened a ltd company with a friend. I have messaged the accountant we now use for the ltd company but waiting for his reply.

Am wondering if anyone has any advice what to do etc.?



Thanks.

no-oneknowsme

i dont really quite understand the question you are asking in your post .

If you be a little more specific in what you are asking then there are lots of people on this board who will be able to offer you excellent advice.

KiKi

I think OP means that he hasn't paid any tax since being self-employed? Assuming this is correct (given the title of the thread):

OP, you don't need an accountant from being self-employed as a sole trader (unless you want one). But you DO need to call HMRC, 'fess up to it and sort out doing tax returns for all the time you've been SE. You will need proof of your income each year, as well as your expenses. You will owe tax and National Insurance (assuming you haven't paid that either), so this will mean a potentially large bill for you.

Sort it out before it gets complicated, and before you get into real trouble. You will need the accountant for your Ltd Co, though, so if you aren't savvy about tax issues (and it sounds like you might not be) then perhaps it is best that you use them to sort out the last couple of years on your behalf.

Nothing to stop you calling HMRC tomorrow, though, and get the ball rolling. However, I don't know what the implications are re not declaring your SE earlier (as you should have).

Hope I understood, and HTH.

KiKi

Tiddlywinks

Contact HMRC - explain yourself - find out how to rectify situation - pay up!

donquine

MattWebb wrote: »

Hi,

Wondering if someone can help us out please.

I am currently a taxi driver on a self employed basis and have been for approx 2 years and haven't been to see the accountant.

I have now opened a ltd company with a friend. I have messaged the accountant we now use for the ltd company but waiting for his reply.

Am wondering if anyone has any advice what to do etc.?

Thanks.

Seeing as you've now told your new accountant that you haven't declared your earnings as a self-employed taxi driver to HMRC, the accountant will insist you speak to HMRC or he will stop acting for you and your friend in relation to the limited company. He won't tell HMRC why he's resigned as your advisor, but he will tell any subsequent advisor you engage, if they ask him why he ceased to act for you.

I'm not sure what your accountant does for you - is it just corporation tax for the limited company? - but if he has expertise in personal tax, he will probably offer to make the approach to HMRC on your behalf. If he's not an income tax person, he will probably be able to refer you to someone who can help instead.

It's not necessary to get an accountant involved, but it is advisable. When people get into this kind of mess, they generally don't know where to start to dig themselves out of it and an accountant can really add value. HMRC will not accept "But I didn't know I had to" as an excuse for not sorting out your tax affairs at the time, but they may look on you slightly more kindly if you say "But I didn't know I had to and now I have an accountant and that accountant will straighten me out and make sure I don't mess up again."

I'm not going to tell you that you won't have any tax or penalties to pay, because it's likely you will have both, but if you get an accountant involved, he will be able to quantify those figures for you and approach HMRC on your behalf. If you (or your accountant, acting for you) tell HMRC now that you messed up, those penalties will be less than if HMRC were to find out themselves and come after you. Owning up always works in your favour, even if it can't totally get rid of a penalty.

Whilst you wait for your accountant to get back to you, dig out all your records as a self employed taxi driver. Remember, you may have earned lots of money and not paid any tax on it, but if you, for example, bought certain allowable items, that expenditure can reduce the amount of tax you have to pay. Capital allowances could be claimed on capital expenditure to further reduce the tax too. If you track down your records showing everything you bought as well as what you earned, an accountant may be able to make the big bad tax figure not so scary.

On a separate note, I would also strongly recommend you ask your accountant for advice in relation to director's responsibilities, because failure to comply with them is pretty serious. One of the key duties of a director is to ensure that the company keeps proper accounting records and pays its tax - which isn't something you managed whilst self employed. As a director now rather than an incorporated one man band, you really need to understand what the law requires of you and take it very seriously.

I suspect by talking to your accountant and by posting here, you're ready to face the music, so good luck and learn from the experience.

Hammyman

MattWebb wrote: »

Hi,

Wondering if someone can help us out please.

I am currently a taxi driver on a self employed basis and have been for approx 2 years and haven't been to see the accountant.

You don't need an accountant as a sole trader. You have registered with HMRC and been filling in self assessments?

I have now opened a ltd company with a friend. I have messaged the accountant we now use for the ltd company but waiting for his reply.

Am wondering if anyone has any advice what to do etc.?

If you haven't registered self employed, panic and expect a fine and a big bill which will be ESTIMATED if you haven't got books and without books you'll have to pay it even if you made no money.