DESPERATE - advice on HMRC debt

PositiveSteps_2

I have also posted this in employment, jobs and training.

Hello everyone,

I've joined as I'm desperate to solve a serious situation.

Due to various factors including depression, it has come to light that my mum has been self-employed for 7 years and has not declared this to HMRC. It's been incompetence, rather than evasion. She has not kept any records of her expenses in this time. It's almost as though it just wasn't happening.

She is now so desperate over this situation that she has planned and nearly taken her own life as she cannot see a way out of this.

As you can imagine I need to do all I can to sort this out as it is hanging over her like a dark cloud.

Where do I start and what do I say to HMRC? She is not earning a lot of money and is in her late 50s - from what I can see gross income is around 20k. She has been working for the same company in all this time.

I'm working on softly-softly approach just now as she is extremely vulnerable and under intensive mental health support so I'm not able to ask lots of probing details.

I'm desperate to set this right. How do I do that?

Any advice gratefully received. She lives in Scotland.

National_Debtline

Hi

I suggest contacting my colleagues at Business Debtline or TaxAid for specialist advice on this.

www.businessdebtline.org

http://taxaid.org.uk

Does your mum own any valuable assets? Aside from making a repayment plan, bankruptcy might be a viable option to have the debt written off if there will not be any serious implications such as losing assets. I believe that prosecution and a BRO is possible in some cases where tax returns haven't been filed and then someone goes bankrupt, so she should file them with the help of TaxAid as it reduces the risk.

James
@natdebtline

sourcrates

Is HMRC aware of your mothers employment status ?

Have they made a tax demand ?

MrsTinks

Also worth contacting Mind in addition to the help your mum is already getting...

PositiveSteps_2

Thank you for the advice to contact TaxAid, I will look at their website. She owns her own home so that is a major asset, although she is on a low income. Could she be forced to sell her property? Coming to a repayment schedule would be ideal although I don't understand how it come be calculated if there are no receipts or expenses?

Mrs Tinks - thank you. She is in the care of NHS and intensive support in place.

HMRC as far as I am aware have no idea of her earnings or existence as there is no paperwork or demands.

PositiveSteps_2

Mrs Tinks, thanks again, reread and you said in addition to other support. I have hope if I can solve this financial burden that it will go a long way to easing her current state of mind.

MrsTinks

You might also find some good information in this: http://www.moneysavingexpert.com/credit-cards/mental-health-guide

ReadingTim

PositiveSteps wrote: »

HMRC as far as I am aware have no idea of her earnings or existence as there is no paperwork or demands.

I don't mean to belittle the situation, but there isn't much point in worrying about what might happen until it does happen. I know the tax man has a long memory and long arms, indeed they're one of life's certainties (the other being death), but you can't really come to a solution when you don't really know the scale of the problem. Especially if HMRC don't currently think there is a problem.

I'd therefore ensure HMRC are updated as to her employment status (employee, self-employed etc) when she's fit to return to work, and also check what they think her situation is with respect to NI contributions - if possible, make them up, as it may affect her entitlement to a state pension (such that it is). Thereafter, I'd probably sit tight, see what happens, and only worry if the taxman comes to her, which they might not - despite what they say, they can't look into everyone, and she might be missed.

nkkingston

Where do I start and what do I say to HMRC? She is not earning a lot of money and is in her late 50s - from what I can see gross income is around 20k. She has been working for the same company in all this time.

Is she definitely legitimately self employed? Are we talking a company like Avon here, or is this an agency situation, like Uber or a cleaning company, where they're claiming their employees are self-employed to get out of giving them their rights? If you've got any doubts, check with Citizens Advice - pretending your employees are independent contractors when they're working a nine to five for you can get the company in a lot of trouble, and could help ease the pressure on your mum.

In terms of figuring out accounts, the money going in and out will be reflected somewhere. Is the business cash based or card based? If the latter, you have the fun of combing through seven years of bank statements to find incomings and outgoings. If it's cash based, try looking for things like appointment books and diaries, phone records etc, to figure out when transactions would have been taking place. If it's a direct selling company like Avon or Jamie at Home, her supplier will have been keeping records. Even if you can't figures from the whole period your mum has been working, if you can get a year's worth that gives you a starting point to estimate her usual turnover.

Since the HMRC isn't looking for the money yet, you've got plenty of time to figure out a starting point, and then approach them. They're much more sympathetic if they don't have to spend their time and money on chasing you, so court that good will.

runforlife

ReadingTim wrote: »

I'd therefore ensure HMRC are updated as to her employment status (employee, self-employed etc) when she's fit to return to work, and also check what they think her situation is with respect to NI contributions - if possible, make them up, as it may affect her entitlement to a state pension (such that it is). Thereafter, I'd probably sit tight, see what happens, and only worry if the taxman comes to her, which they might not - despite what they say, they can't look into everyone, and she might be missed.

You can check national insurance contributions here
https://www.gov.uk/check-national-insurance-record

Recently done Mrs Runforlifes and went all the way back to the beginning of her working career circa 1984. Well worth it.

dancing_star

Penalties for unprompted disclosure should be less than for prompted disclosure, ie if she 'fesses up to HMRC before they send a letter saying they suspect she has been failing to declare income. Try googling the Let Property Campaign, their disclosure notes also apply to other income. There's also this link
https://www.gov.uk/estimate-self-assessment-penalties