In serious trouble, advice pls!

Pmhplumb

Hi,
First time posting on a forum so not sure if it's in the right place!
Anyway....
I've got myself into a pretty awful situation and have come to realise it's time to deal with it and stop burying my head in the sand.
I'm a self employed plumbing and heating engineer and started on my own 9yrs ago. My money management wasnt and still isn't great. About 4 years ago I entered an IVA as I had developed a debt of about 30k which was primarily business related. I struggled to keep on top of repayments as i had a bad year for earnings and thought it was the best solution at the time. I have never missed a payment to my IVA practitioners.
Initially I had a tax break and even a rebate from hmrc. I then proceeded to have a good year for earnings (about 35k) but didn't put any aside for tax savings. Needless to say I was hit with a tax bill I couldn't afford so I started burying my head in the sand till now. I currently owe just under 20k to hmrc.
I'm now in a position where I could do with expanding my business, I'm very busy and turning work away. But I want to sort my affairs first.
I'm not, unsurprisingly, in a position to pay off that sort of money. I cant/won't borrow to pay it off. Robbing Peter to pay Paul got me in financial difficulties originally.
I don't own a home and have very few assets, eg I have a van and tools.
I've been fortunate that my partner has a high enough income to support both of us, so buying household things has never been a priority to me. But to top it all off I never seem to have any spare money to put to one side, there is always some bill that needs paying.
I'm scared to contact hmrc as I don't want to lose my business.
I'm going to be making changes in the running of it to prevent all this happening again but how can I get out of this mess? Any advice would be great.
Thank you.

Pinkwhisk

Hi,

Business debt line will be the best people to advise you on this - 18.23 they are national debt lines sites company.

Are you still in IVA? Try talking to them if you are to see if they have any advice for you, but I know for sure business debtline will have advice for you

P W

Pmhplumb

Thanks for your reply, yes I'm still in my iva. Think I've got another year left. As far as I'm aware I can't add hmrc debt to it.
I've been advised by everyone to save for tax bills but it's hard when all my money goes out as quickly as it comes in.

EssexHebridean

You need to start siphoning off the tax/NI money as you get paid - work out roughly what percentage you need to allow given the bits you offset against it, add 3% on for safety and put that straight into another account as soon as invoices are paid. The mindset I used right from the start was that this was not my money - therefore spending it was stealing. it worked for me.

I wonder whether you can convert the standard SOA that is usually used for household budgets on here for business use? Might be worth a look - the link is in the sticky post at the top of this board.

You're absolutely right that you need to tackle this now - and those who've advised Business Debt Line are spot on. Good luck.

National_Debtline

Hi

I agree with the others that you need to take advice from Business Debtline. TaxAid might also be useful for you.

http://taxaid.org.uk

Business Debtline have a budget template which may be more suitable for you than the standard SOA:

www.businessdebtline.org/EW/steps/step2/Pages/Step_2_30-budget-sheet.aspx

James
@natdebtline

enthusiasticsaver

If you are spending money out as fast as it comes in even though you don't pay household bills and are working flat out then a couple of things to check.

What is your credit control system like? - invoicing, chasing payments etc

Are you charging enough? Compare your prices with other plumbers in your area.

You should be putting money away not only for tax but also depreciation on assets like your van, equipment etc.

Are you making efficient use of your time? Taking longer between jobs than necessary?

Have you approached HMRC to make an arrangement?

enthusiasticsaver

Apologies I just saw you have not approached HMRC in case you lose your business. I can't see how HMRC would benefit from that and I think ignoring them is going to make it worse. Burying your head in the sand usually leads to suffocation.

Ray_Singh-Blue

May be relevant, i'm self employed and have a system that works ok. I Keep a monthly spreadsheet of current assets (bank accounts) and current liabilites (money owed including credit cards and projected tax). The number to focus on is net current assets, which is current assets minus current liabilities. I like to keep this figure above a certain level, £20K. If it drops below £20K I know I have to keep an eye on cashflow. If it drops below £0 then I know I have a problem