Tax returns and bankruptcy.

JohnSmith66

I'm considering bankruptcy to get me out of difficulties and give me a fresh start.

I'm self employed and I haven't completed a self-assessment tax return for the last few years. My question is:

Do I need to do them so as to know the exact amount owed to HMRC, or do we just draw a line under it and push forward with the petition?

Best regards

Cobalt77

Owing HMRC money isn't always straightforward when you go BR.

The OR may well give you a BRU (i.e. extend your Bankruptcy restrictions beyond the usual 12 months), and at the very least will want a rather full explanation of why you felt you didn't need to pay tax at the expense of everyone else.

Depending on your business type, the OR has been known to insist that people prepare accounts for all the missing years so they can work out the extent of tax not paid and ascertain whether money has been secretly squirrelled away. If you do a search, you'll find one chap on here (around Christmas time-ish) who has been placed on indefinite bankruptcy (i.e. not the usual 12 months) until he can fully account for all his income (which he can't, apparently)

Then again, if your circumstances are relatively simple and your income modest, you'll probably find things are far simpler and less stressful.

The best advice is to give Business Debtline (totally free and trusted service) a call before you go any further, so they can talk you through the possibilities: https://www.businessdebtline.org/

HTH

JohnSmith66

Thanks - that does help.

fraggle45

How did you manage to get away with not filing your tax return without being fined? My dad got slapped with a £100 when he filed 1 day late. Do they even know you are self employed? Both myself and my brother in law have had our tax returns investigated by HMRC not a pleasant experience. My was straight forward. My brother in law went through an 18 month investigation so that they could find a £5 discrepancy! I have just gone bankrupt and am a sole trader when well enough to work and I have so far been asked for the last 2 full tax year accounts - hoping they don't want more.

JohnSmith66

My fines are around £4000. Haven't paid them though.

Robinho

If HMRC are your only creditor. Wait for them to petition and save yourself the money

Cobalt77

Robinho wrote: »

If HMRC are your only creditor. Wait for them to petition and save yourself the money

Doesn't always work these days, as HMRC are sneaky barstewards and will often go for a CCJ first and then secure it against any equity in your property.

Not only does this completely fv.ck your credit rating, but it ensures they are then a secured creditor (so may actually get something at some point in the future, or they can "sell" the secured debt on and get some money)

If they make you BR, it costs them more money than a CCJ and they will usually end up getting nothing.

This is why the CCJ is often their weapon of choice now unfortunately.

HTH

JohnSmith66

Interesting stuff here. HMRC are not the only creditor. Nobody is really hassling me for money. I'm looking to move forward in a legitimate fashion.

I won't go into the reasons everything went wrong, major depressive disorder was a major factor. I've now got my head back where it should be and want to underline the past.

I own no property, so a CCJ wouldn't bother me.

How does this change things? Keep my head in the sand for a while until it gets close to legal action?

Cobalt77

Well, if you don't intend to bother filing tax returns and are thinking about "keeping your head in the sand" for a few years, your problems will only get far worse.

At some point, you WILL have to do your accounts. The longer you delay things:

1. the more tax you'll owe
2. the more incompetent/dishonest you'll look
3. the more stress you'll have
4. the longer and more severe any potential penalty/restriction may be

You are probably best off requesting copies of your last 6 years bank statements from your bank (pay a maximum £10 fee under data protection regs for everything). From this, you can work out a rough idea of your income/expenses - which will at least show the OR and HMRC you are making an effort.

Based on this info, you may well be let off by the OR/HMRC if the amount of tax owed is not ludicrously high - especially given you've been suffering from depression.

As a starting point, give Business Debtline (free and trusted advisers) a call. Here's their website: http://www.businessdebtline.org/

HTH

JohnSmith66

I think the sooner I embark on this, the better. I'll start with the bank statements.

My business account is closed - I hope I can get copies on a defunct account.