does the revenue stop assessing tax if you dont send in tax returns now?

mrsS_2

this may be a stupid question, but before self assessment the revenue used to issue an estimated assessment every year if they hadnt had your tax return and accounts.

a family memeber is self employed and the last tax return he submitted was year ended 5th april 04.(first year of trading)

he was assessed for this tax and the revenue asked for the first and second payments on account for 04/05.

he did not submit 04/05, 05/06 returns and obviously not 06/07 yet.

he has not been asked for final payment for 04/05 or for any payments on account for 05/06 or 06/07.

he has not paid ANY tax for any of these years because he has not been asked to.

i think his tax bill for each year will be in the region of £15000 pa- with penalties i think he is looking at £50000!!

can any one explain what is going on please?

will he suddenly get a huge bill when he sends in the returns?
why hasnt he been asked for any money?

i think he is contemplating just not doing any returns and hoping it goes away-will this honestly work?

thanks for any help

WHA

The name is the giveaway - "SELF" assessment.

He has a legal obligation to submit tax returns and pay the right amount of tax.

HMRC "may" issue assessments where tax returns are not submitted, but don't have to, and generally only do it once 2/3 years tax returns have not been sent in. Of course their assessments are merely their estimate and are not the "right" amount - just HMRC trying to get some money in and to encourage the submission of the returns. Not only are there the £100 late filing penalities for each return, there is a 5% surcharge added every six months and interest on top. There is also the potential of a daily penalty for each day the returns still aren't submitted.

HMRC won't go away - eventually (probably soon) they's start issuing assessments for the outstanding years, which will increase each year, and then they'll start threatening the daily penalties on top. If still no tax returns, they'll go for bankruptcy.

Your relative needs to get themselves sorted quickly, get the outstanding tax returns submitted and pay the tax. Penalties, surcharges and interest will then be automatically added which will also be substantial given the figures you quote. The longer it goes on, the more it will cost your relative.