Tax issues over 20 years ago - right to still be worried?

murphiesgirl

20 years ago when we were all young(er) and stupid(er) someone I know did cash-in-hand work in nightclubs, signed on a bit and existed mostly on cash handouts from family which they banked. No tax was paid.

This person then worked abroad for ages, this time all above-board.

The family member died but after 7 years of the last cash handout, so this isn't liable for tax, I think (?)

Now this person wants to come back to the Uk but is terrified about the money they banked years ago. They are scared that they will be 'of interest' to HMRC when they try to register to pay any NI in this country, and they worry that there is no proof of where this money came from, just their word that it was a series of cash gifts.

Is this person right to be so scared?! I am worried that they will make themselves ill over it all.

Huge thanks to anyone who can reply.

ceeforcat

VERY VERY unlikely to have any reason to be scared. In my view HMRC would be approaching the employer in the first instance - given the timescale and what has happened since, there really seems to be little prospect of a successful investigation.

Personally, I would not be worrying at all.

Pennywise

It will only come to light if they were already on HMRC's radar all those years ago, i.e. if they were already under suspicion or had outstanding tax returns or outstanding tax liabilities. If that's the case, there'll be a "flag" on their records so that when they re-appear, it *may* re-open the old files. But even then, 20 years ago, their files were on paper and their IT systems were even more antiquated, so even if there was a "flag", they probably wouldn't be able to find the files and probably wouldn't be able to access any IT systems from that long ago. So, overall, no, nothing to worry about UNLESS they were under enquiry when they left, and even then, probably too long ago to worry. What would be more important is that they can prove what they've been doing more recently, i.e. that they were indeed out of the country and earning/paying tax in whatever country they were living in.

ceeforcat

I have had another read of your post following pennywise's intervention and it seems that your friend is more worried about the cash handouts from family members than the tax not paid on earnings. I honestly cannot see ANY issues here at all especially when you state that the family member died more than seven years after the last 'gift'. In any case there never would be any tax due on the recipient of the gift, i.e. your friend.

murphiesgirl

Thank you so much for these replies. I've since found out this was 12 years rather than 20, but the time between last cash gift and relative's death is still mor ethan 7 years so all the main facts still apply.

Really appreciate it.