Overdue tax and penalties

libertyec

Hello fine money saving people,

I have a major predicament with overdue tax. My main question is about what penalties to expect, however here is a short background on how I got to where I now am.

I am a New Zealander who lived in the UK and worked there from 2006 - 2009. I returned to New Zealand early 2010 and have continued living here since (and will do permanently).

For my last couple of tax years in the UK I was on the wrong code (my employer's fault, but that’s a whole separate thread). HMRC delayed some time before notifying me. Eventually they sent me a tax bill for underpaid tax of £3500. I argued back and forth with them until February 2013. I could give more detail about the arguments on both sides, but basically I’ve accepted that I am not going to win this fight and now the best thing I can do is pay the bill and be rid of the whole business.

The latest letter I have from them is dated Feb 2013 saying they reject my claim and now I will have to pay the money back through the self assessment system.

The trouble is that I have delayed before acting on all of this. I have had two children in the last three years and just haven’t been sufficiently focused on sorting it out. Now I have heard various items in the news about HMRC penalties etc and it has put the frighteners on me. I am now petrified about how much I will owe once the penalties have been added up.

So here are my questions:

1. How much am I likely to pay in penalties? The underpaid tax is from as far back as 2007/08 however they did not formally reject my claim until Feb 2013.

2. Does anyone have any tips or pointers on how to go about talking to HMRC to avoid the penalties?

3. Does it help my case that in their final letter HMRC said they would contact me with further information about the self assessment system and they haven’t done so?

4. If worst comes to the worst and the penalties are substantial, will they let me pay the original tax amount to stop further penalties, and then pay the penalties on a payment instalment plan?

I have no experience of the self assessment system and all of this happened so long ago in another country – I’m quite worried about how I’m going to fill out the self assessment paper work. I imagine it is complicated and difficult. Anyone with any other practical pointers or experience, please feel free to comment.....

Thank you so much in advance!

libertyec