Please help, i'm in a LOT of trouble :(

Joe517

Hi guys, heard about this place and thought id try you out! I have been excrutiatingly stupid and i am going to get counselling for it and some other stuff but this is the ££ part that im asking for help with. I'll try and keep it short as its very boring and im sick of even thinking about it but its taken over my whole life.

In Jan 2003 i left my full time sales job to persue a self employed/freelance sales career. I have been working for a local company on this basis since then and invoice them monthly for earnings, which includes hourly pay and comission.

The first 2 years i earned about 50k and the last couple about 30k, but this year its gone down a bit and i get about £1500 a month. I started geting cheques paid to me then cashing them, then in the last 2 years i have had them paid into my bank account, I have no other money coming in or paid to me.

Heres the problem: I have never filed an income tax return and have paid nothing in the way of NI or anything else. I registered initially as self employed and thats it.

I have looked online and spoken to a few people who have just said "go bancrupt" which is the sensible idea i think, so im asking:

a) Is it good idea?
b) What possible excuse can i give to the tax man other than i have been a complete and utter mentalist. What will happen to me? Could i go to jail?
c) Will the company i freelance for be informed?
d) If i take on a new job (i have been headhunted by a good comapny and its a full time role), then will they know whats happened?

I just HAVE to come clean now - its beyond a joke and i want my life back. Im really really worried and have gone from the most confident, outgoing, care-free person i know to a very very worried stupid one one in 4 years and i hate it.

I have no excuses at all, but i really want to sort this out now.

Please help me if you can before i take the next step.

Joe (((((((((((((((((((((

NekoZombie

Hi, welcome

Have you actually contacted inland revenue to find out what you owe?

wherediditallgo

Hi, & welcome to the forum.

I think you should first find out what you owe, then look at whether you can afford to repay it in instalments. You'll need to find out about your National Insurance contributions anyway, as if you should end up out of work your benefits could be affected as well as your pension further down the line.

While you're waiting for the Inland Revenue to confirm the figures, could you post some income & expenditure info (you'll see it called an SOA on this forum) for us, as that will help us to see where you might be able to make savings to contribute to the repayments if that's feasible.

Joe517

Thanks for the replies so far

The thing is i havent actually contacted the Inland Revenue yet at all. What is their proceedure when i do? Will they contact the company i have been working for as well? I dont fully understand the proceedures and im worried that i could be left high and dry with no job, reference etc (which i obviously deserve but am trying to avoid).

fermi

Hi Joe517.

While a few posters on this forum have had a run in with the tax man (including at least one who was made bankrupt by them) you may get some quicker advice on the issue of dealing with HMRC and their likely reaction to your situation on this MSE board which is specifically for tax issues.

http://forums.moneysavingexpert.com/forumdisplay.html?f=22

In the meantime we can help with the BR related questions you have.

Richard_S

Hi Joe,

The correct procedure would be to engage the services of an accountant to prepare income and expenditure statements for the years you’ve been self employed and calculate the Tax & N.I due. You’ll be able to offset your expenses against your income so you won’t be paying tax on all your earnings but even so you’re probably going to be facing a fairly sizeable tax bill.

Once you’ve done this you should contact the I.R and explain that you’ve misunderstood your responsibilities as a self employed person and have only just had the appropriate documents prepared. You might then be able to agree a repayment schedule depending on how large the tax bill is and how much you can afford to pay.

Another consideration is that the I.R may query your self employed status. They have clamped down significantly in recent years and the criteria to qualify for being self employed is quite complex. In summary, if you’re using the assets of the company you are doing work for then you’re an employee of the company not a self employed person. An accountant would be able to make an informed decision on this based on the information you supply them. If the I.R decides that you didn’t meet the self employed criteria then it’s the company you were doing work for that’s liable for your Tax and N.I contributions. I can only imagine that a situation like that is not going to go down very well with the company you’re currently working for; the problem here is that you won’t know where you stand until you’ve taken professional advice.

In answer to the questions you raise:

a) It’s impossible to say whether it’s a good idea for you because I don’t know your personal circumstances, i.e. do you own your own home or other valuable assets? If you’ve no assets, a large tax bill and other consumer debt then bankruptcy would probably be the least painful way of becoming debt free and giving you the chance to put your finances in order.
b) If it was me, I’d say I didn’t fully appreciate the responsibilities of being self employed and when I did realise I engaged the services of an accountant and “here I am, trying to put things in order”.
c) That’s an unknown because it depends on the outcome of any advice you get from an accountant. If you are liable and decide to declare bankruptcy it’s possible that they won’t find out; a notice is put in the local paper and some people do scour the Public Notices in the absence of having a “real life”.
d) Here again it depends on what happens. If you declare bankruptcy you’ll be given an NT Tax Code and they may conclude from that, that it’s due to bankruptcy, although there are other reasons why you’d have an N.T Code.

Without having any in depth knowledge of your financial position it’s only guess work but if I was in your position I’d take the new job, have an accountant prepare all the relevant information, approach the I.R and try to “do a deal” with them or if the amount was too much to manage then take a view at that point as to whether bankruptcy is best for you or not.

The more detail you can post on here the more meaningful the replies will be.

Best regards
Richard

Posthinking

Doesn't HMRC have an amnesty at the moment? I think, but am not sure that it expires at the end of this month. If I'm right then contact them now.

Bean_Counter

The amnesty ends at 8pm for the phoneline and midnight for the internet. Today's deadline is only to notify an intention to disclose. You have until 26 November for full disclosure and payment, plenty of time to calculate what is due.

I gleaned the following off the HMRC website (link further down.) Joe 517 may well be worth giving them a call. He should also read the separate thread on the amnesty, in the cutting tax forum, I think.

"You cannot use this facility if you have not held an offshore account that has been connected with a loss of UK tax. However, as in the past, you can make a disclosure to any HMRC office. If you approach an HMRC office and then make a full disclosure with payment under the same terms as within this facility, you can expect the same treatment. We may need to see appropriate evidence to satisfy us that the disclosure is complete."

https://disclosures.hmrc.gov.uk/oaics/

NekoZombie

Lets hope the OP sees this before tonight at 8pm. Eeek!

debtmonkey1

Joe-Just gone BR myself & am in the same situ as you (virtually carbon copy with a few exceptions-commision only in sales) re tax/NI(+ loads of other debts!).

I also, was worried sick re: the tax ,to the extent of drinking a bit (!) too much, depressed, etc. My best mates in the police & he said there is NO WAY Iwould be sent to prioson over it as prisons are too full & ulness it's a lester piggot jobbie (over a million & he only got 6 months!) you WON'T be sent to prison/prosecuted.

You have simply not declared tax/ni, it's not EVASION but according to my copper mate 'due care & dilligence' (ie not keeping books, etc...).

I spoke to a fully qualified money advisor re: this & the response was 'why stir them up before any bankruptcy', 'why put yourself through the grief'?? Makes sense as the tax/ni is simply an UNSECURED DEBT that can be included in the BR.

If/when you go BR the revenue HAVE to deal with the receiver or they are breaking the law (after all BR takes away your resposibility for the debts & the OR is in charge & people MUST deal with them). In any case-if the IR see you are BR why take any legla action? They won't get any money back at all & as I said earlier ulness you were EVADING tax (& even then it'd need to be a HUGE ammount) they won't prosecute.

If you DON'T want to go BR then look on the IR web-site-their is a confidential freephone number you can ring-you give no name, etc & they give you a ref. number. This way you could ask them the approx ammt owed & any likely action & if you DID decide to pay them back the very fact you've called them anonimously (you can quote your ref no when/if you confess!!) means they'll look far more favourably on you.

With me...it was the fear of what would happen to me re ni/tax that stopped me going BR. If I'd have known then what I know know I'd have done it years ago!

Hope this alays some of your fears!

NekoZombie

debtmonkey1 wrote: »

Joe-Just gone BR myself & am in the same situ as you (virtually carbon copy with a few exceptions-commision only in sales) re tax/NI(+ loads of other debts!).

Bankruptcy has been great for me, but even so I would still remain cautious before I recommended it as a solution for someone else. I think this is why other posters have asked the OP for more info. We do not *know* if he owes anything more than tax and national insurance, so I'm not sure it's the best advice to tell him to just go bankrupt without knowing a few more facts.

debtmonkey1 wrote: »

I spoke to a fully qualified money advisor re: this & the response was 'why stir them up before any bankruptcy', 'why put yourself through the grief'?? Makes sense as the tax/ni is simply an UNSECURED DEBT that can be included in the BR.

:eek::eek::eek:
I would say he shouldn't just go bankrupt without knowing exactly what the situation is; to do so would be incredibly irresponsible. I'm not even sure the judge would allow it. Part of the bankruptcy process is taking full advice from various sources, and it is necessary to make the decision with full awareness of what your individual situation is.