Do I go bankrupt again?

Mouse007

PLR = Potentially Lost Revenue - assessment is based upon amount of tax HMRC think has been “lost”.

I’d agree if all your income was under CIS, on which 20% tax was deducted, then you might be entitled to a refund. But, this depends upon how much your income was. Was any of it in the 40% tax club? Don’t forget even in 20% band you also owe Class 4 NIC @ 9%. Both can reduce and/or wipe out refunds due on Personal Allowance.

Mileage can be claimed at 45p a mile (not 50p) for the first 10,000 miles only. Thereafter it’s 25p a mile.

Clothing CAN NOT be claimed, despite what your mate down the pub tells you. Never Never Never. Uniforms provided by employers, maybe. Protective overalls, Hi Vis Jackets, steel capped boots, hard hat OK, but these go over normal everyday clothing. If you’ve claimed jeans and T shirts along with snacks and drinks then you’ve over claimed.

Tools, materials, specific telephone calls (not the whole bill), OK.

The simple rule is: only those expenses incurred in pursuing your income are allowed. At all other times you need to be clothed, to eat and to drink. These are not additional costs incurred in earning your income.

You’ve saved £300 a year, at a considerable cost, attempting this yourself. Advice to others is (as per above) check with an accountant, not the man down the pub (or other subbies waiting to get caught).

Your first action is to dispute the penalty on the basis that you did not receive the previous demand for information (explain why). Offer to now do so.

HMRC want you to provide evidence of your expenses- full details including all receipts and mileage records. Without it they have estimated £1,200 instead of your £3,000 - £4,000. From this they have recalculated your tax and raised penalties.

Be nice, super helpful and see if you can swing this to a deferred penalty (Penalty waived after 2 years if you comply going forward). That’s what a good accountant would do.

bradztheman

And thats exactly what ive claim for, overalls and ppe, also a fraction of my phonebill for business calls.

Give up with it, i was responsive for the first 2 years of returns obviously but i never received the post for the year 16/17. Im fighting a losing battle! Its stressing me out to the max. Going bankrupt would wipe the slate clean and a fresh start. I never have constant work so can not set up a payment plan and this is affecting my mental health once again!!

KeepOnKnitting

From what I can see, you need an accountant. Your other option is to be done for fraud, and need a solicitor. HMRC seem to think you have claimed a tax rebate of more tax than you paid.

Get in touch with them and start apologising asap.

bradztheman

The penalties seem absurd and a £15,000 tax bill plus £5,000 other debts is enough for anyone to go bankrupt! How can they expect someone on roughly £16,000 a year before tax to pay this? Bankruptcy seems the only way

bradztheman

I have phoned them, a woman answered as the guy dealing with it wasnt at his desk. Not much help at all, even if they do reduce the penalties slightly im still stuck in with a massive silly bill.

fatbelly

If you can sort out an exact figure that HMRC say you owe, then you can have a look at whether bankruptcy is the way forward, or a Debt Relief Order or a debt management plan.

The suggestion of fraud worries me as fraudulent debts are not written off by insolvency solutions.

GazHatesBanks

Are the penalties for non filing of return/non payment or for incorrect returns? Not filing/paying returns will result in penalties that cannot normally be overturned.

If the return is incorrect (from HMRCs point of view) then if you can show that the return is correct then these penalties can be reversed.

It is not unknown for HMRC to make mistakes so you can challenge their calculations, or it could be that they have not allowed your expenses as you have not yet provided the proof that they have asked for

You really need to know what the error is and whether it's something that can be corrected.

Whatever the outcome, please please use an accountant for the future while you are self-employed. £200-£300 a year is a very small price to pay for peace of mind (and it's tax deductible).

bradztheman

The penalties are for what they think ive deliverately increased my tax rebate, i havent, ive worked it out to my own knowledge but yes in the future i will definate use an accountant. I still don’t understand the PLR amounts for each year, how can they charge me 35% or 70% penalty on an amount i was never paid!? Also how can they make me pay it back if i do go bankrupt and am signed off with a mental illness? I cant see how they can?

antonic

The situation is NOT beyond hope YET, but your going to need to work fast.

As others have said see an accountant BEFORE you start talking to HMRC in depth regarding this.
If you cant afford an accountant speak to HMRC and apologise for not sending in the info they requested and tell them why ( you had to move ) and give them your current address.
Also ask if they will give you time to supply the info and if you do will they reconsider the penalty.
If they refuse . you can ask for an independent review of the case .
If your unhappy with the review then you can take the matter to the independent Her Majesty`s Courts & Tribunal Service.
Until all the appeal process`s have been exhausted the debt *should* not be referred for enforcement action, so there is no need to panic about that (yet).
The one certainty in this , is that if you do not talk to HMRC, you may find yourself getting a visit from a Field Force Officer oh HMRC to collect the debt and if unable to do so a Process Server to serve a Statutory Demand and then Bankruptcy Petition, on behalf of HMRC
If you need more help let us know

bradztheman

Thanks, i spoke to a woman who was temporarily at the guys desk today, she said to write a letter and send any information.

The problem i have got is i worked all of this out on my laptop, which is now sold and i dont have any backups of this. The amounts have also been adjusted so i have no clue of what amoubts for what i have submitted now. What a mess!!