Can HMRC do this?

JeanGray

I'm re-posting this as I don't think the previous title really reflected the situation.

I've been looking on the MSE forums to find some advice with regard to VAT.

In April last year (2013) I received an unexpected letter from the VAT office demanding a sum of £75,000, money that I don't have and I don't believe that I owe.

For several years I had owned a hair and beauty salon business involving self employed staff members renting space, rooms/chairs. I did not include their income in with the salons income as it was separate and they had all signed agreements to say they were self employed and responsible for their own national insurance, tax and VAT. For the most part the agreements mirrored the National Hairdressers Federation recommendations.

In 2007 the VAT office enquired into my business and sent in a VAT officer, he took away all the financial records and appointment books for some time yet he did not instruct me to register for VAT or enforce me to register for VAT. His enquiry continued throughout 2007 and I was still in communication with him on 30th November 2007. He seemed satisfied that the staff were self employed, he knew the financial position of the business, the manner in which the business was run (with self employed sub contractor staff) and saw the turnover figures and did not instruct VAT registration.

I continued with my business thereafter under the impression from this that the VAT office was fully satisfied with how the business was being run, they did not check again or contact me again until April 2013, almost a year and a half after I ceased trading.

In November 2011 my business was taken over as I could no longer run it due to poor health. I came away completely from the business and no longer had any involvement in it.

Apparently in 2012, a rule was brought in that meant that the turnover from self employed staff had to be counted towards the salons turnover, so despite them being self employed unique entities responsible for their own tax, national insurance and VAT, money relating to them from October 2012 was to be considered as part of the whole salons vatable income, but most shockingly was that I am informed this rule has been allowed to be backdated. As a result of this the VAT office have issued me with a huge bill.

Prior to October 2012 this rule was definitely not clear in law with regards to VAT, and besides I thought I was running the business correctly as the VAT office had enquired into my business and how it was run throughout 2007 and appeared completely satisfied. I couldn't see how they could demand this from me as I no longer had my business and my involvement with it had ended in November 2011, well before this rule actually became definite and clear in law.

Since April 2013 I have wrote numerous letters to them advising them about my life term health issues (I am registered disabled and have life term health conditions needing regular treatment for life) and my views on this matter. It has caused me so much stress that I have had several breakdowns.

I sought advice from National Debt Line, Business Debt Line, Citizens Advice Beureau, Tax Aid, Mind, StepChange, Debt Support Trust and many accountants who all felt it is a very extreme example and that from their experience the VAT office is treating me very harshly.

In particular I find it extremely wrong that the VAT office had enquired into the business for a considerable amount of time during 2007 with no concerns.

I have tried everything I can to get help with this matter but it seems the VAT office is above everything and there has been very little anyone can do to help.

I am desperately seeking advice with this matter, the VAT office intends to pursue this amount so I will almost definitely end up bankrupt and homeless. I can't cope with this as I am registered disabled, have 4 lifelong illnesses requiring regular life term treatment and I am unable to work. I am currently being monitored by my GP, counsellor, a Physiologist and other health care support workers.

Any advice would be greatly appreciated.