self employed 1 week,amount payable £30,000.....HELP!

arizonababy

:(Way back in 1993 i worked self employed for ONE WEEK i notified the tax office of my change in circumstances (a job with a good company,not self employed)
I never thought anything of it until and i recieved a tax bill and another and another.
I went to the inland revenue in person (three times) to rectify the error.
I was told this would be the end of the matter.
An infinite amount of phone calls to no avail.
Advice from accountants no avail.
I now `owe` the inland revenue £30,000.
Can anyone PLEASE point me in the right direction of action i can take.Advice would be appreciated.

Pennywise

Almost certainly this is because self assessment tax returns havn't be submitted for that year and every year since, hence late filing penalties and eventually "determinations" made to estimate the amount of tax due. The only way to clear all this is to complete and submit self assessment tax returns for all the years - if no tax is due, all the penalties and determinations will be zeroised. There is no other way but to complete the tax returns and the situation will get worse with each passing year until your record is brought up to date. This is quite a common scenario, so it's very strange that HMRC and an accountant havn't told you what you need to do to clear it.

arizonababy

:)I know!
Ive been badly advised for sure.
Until now,many thanks and kind regards.

dori2o

Pennywise wrote: »

Almost certainly this is because self assessment tax returns havn't be submitted for that year and every year since, hence late filing penalties and eventually "determinations" made to estimate the amount of tax due. The only way to clear all this is to complete and submit self assessment tax returns for all the years - if no tax is due, all the penalties and determinations will be zeroised. There is no other way but to complete the tax returns and the situation will get worse with each passing year until your record is brought up to date. This is quite a common scenario, so it's very strange that HMRC and an accountant havn't told you what you need to do to clear it.

1993 is prior to the commencement of Self Assessment which started back in 1997.

Also,all years prior to and including 2006-2007 are now out of time for SA so HMRC is under no obligation to cancel any penalties/determinations for that year or the years previous to it.

Unfortunately for the op I think the majority of this money may have to be paid.

I would suggest filing in the returns that are stillin time to see if this reduces the current amount due. It may then be time to speak with HMRC to come to an agreement with regards to the outstanding balance for earlier years.

Pennywise

OK, I mis-read the post and got it into my mind it was 2003 not 1993! - That's a very long time ago and HMRC would have sent dozens of letters and demands to you over the years. Did you move house and if so, did you tell HMRC? If HMRC were told of a new address but continued to send paperwork elsewhere, it enhances your chances of an easier and cheaper resolution.

Whilst dori20 is right in saying the timeframes are closed for amending the demands etc., this is "technically" in that it's what the law says and what the HMRC systems allow for. Whilst a late SA return may not be able to be "captured" into their systems, a decent tax inspector will accept and manually file it and reduce the demands etc accordingly.

But as it looks to be 18 years of missing returns, then it is indeed unreasonable to prepare and submit returns - you probably wouldn't even be able to get hold of blank returns for such a long period as the returns change each year and indeed the whole system changed with SA.

However, dori2o didn't mention the concept of "equitable liability" which is a practice whereby HMRC will accept the evidence of time-barred returns, accounts, claims etc where there is a tax debt but no longer any legal right to adjust the liability. The amount of the legal liability is not actually amended, but HMRC will not pursue the difference between the original liability and the revised amount. That link suggests the practice is to be withdrawn but in 2010 things changed and it still exists and is likely to be given statutory basis instead of being a concession, so it looks to be here to stay!

You need to make a formal request for "equitable liability" to be considered in your case, but to do so, you need to give them all possible information as to your tax affairs for all years concerned, i.e. dates of self employment, amounts earned, and as much info as you can provide about what other income you had in the missing years, i.e. employer names, approx wages, etc. As long as you don't actually owe much tax, then the actual amount you'll end up paying should be a lot lower than they're demanding, but only if you can convince them that you don't owe as much - any "gaps" in your case won't look good, but if you can give a full history, then your case is more likely to succeed. But, you do need to enter into dialogue with them. Don't bother writing or phoning the debt collection section who'll be the ones hounding you - you need to speak to the actual tax office dealing with your affairs - find which office is dealing with your PAYE now and contact them - write, don't phone, and mark your letter "urgent" on the envelope and letter to get it prioritised, and lay out all relevant information - remember the person who ends up dealing with it will have little information and knowledge about you, so make it factual and don't waffle - just keep it full of facts - say you're wanting to claim "equitable liability".

At the end of the day HMRC are there to collect "the right amount of tax" as they keep telling us. If their demands and determinations are wrong in reality (although right in law), that doesn't meet the aim of the "right" amount, hence equitable liability.

BoGoF

Equitable liabilty was abolished on 1 April 2011 and replaced with, I think, 'Special Relief'.

I'll post a link once I find it.

BoGoF

Here we go

http://www.hmrc.gov.uk/briefs/income-tax/brief1711.htm

Pennywise

BoGoF wrote: »

Here we go

http://www.hmrc.gov.uk/briefs/income-tax/brief1711.htm

Thanks for that - learn something new every day - you were quick to notice that update, not appeared on any of the accountancy and tax specialist websites yet!!