HMRC Sent me a Letter re Unregistered Business

hoping4calm

Hello,
I am in big trouble it seems!
I received a letter from HMRC stating that they would like to audit my business but there’s a few problems with this.
I work part time and only earn about £12K / year but I have been running a ‘hobby’ type business which has been doing pretty well in the last few years and is something I have been doing for close to 30 years. I have built up a lot of repeat clients in this time - it's a health type business.
The issues is that I have never registered this business and never filled out a self-assessment form as just assumed that it was a hobby type thing. I have been making about £30K / year cash in recent years and have advertised online especially on Facebook but I deleted my page upon receiving the letter.
What on earth do I now do to try and resolve this? HMRC want me to declare everything but I would be looking at possibly tens of thousands and I don’t have this floating around. I own my home outright but don’t want to lose this.
Would HMRC believe that I was only making very little (not enough to be taxed on) as I have deleted my Facebook page? Could they really go back as far as 20 years ago into my records?
I’m pretty sure someone in my street has tipped HMRC off.
If anyone has been through something similar, please let me know what to do.
Thanks a lot!

[Deleted User]

hoping4calm wrote: »

Hello,
I am in big trouble it seems!
I received a letter from HMRC stating that they would like to audit my business but there’s a few problems with this.
I work part time and only earn about £12K / year but I have been running a ‘hobby’ type business which has been doing pretty well in the last few years and is something I have been doing for close to 30 years. I have built up a lot of repeat clients in this time - it's a health type business.
The issues is that I have never registered this business and never filled out a self-assessment form as just assumed that it was a hobby type thing. I have been making about £30K / year cash in recent years and have advertised online especially on Facebook but I deleted my page upon receiving the letter.
What on earth do I now do to try and resolve this? HMRC want me to declare everything but I would be looking at possibly tens of thousands and I don’t have this floating around. I own my home outright but don’t want to lose this.
Would HMRC believe that I was only making very little (not enough to be taxed on) as I have deleted my Facebook page? Could they really go back as far as 20 years ago into my records?
I’m pretty sure someone in my street has tipped HMRC off.
If anyone has been through something similar, please let me know what to do.
Thanks a lot!

Tax fraud is very serious pack your bags

DE_612183

You need to engage an accountant asap.

You say that you only make around 12k a year but you also state you have been "making" 30k a year.

Did you think that you could "earn" £30k a year tax free?

You should be ok as far as VAT is concerned, but you'll probably be due to pay either income tax and NI on that income.

I think HMRC only go back about 6 years - so your tax bill maybe somewhere in the region of £30k - but the best thing to do is GET PROFESSIONAL ADVICE.

Astar1809

hoping4calm wrote: »

Hello,
I am in big trouble it seems!
I received a letter from HMRC stating that they would like to audit my business but there’s a few problems with this.
I work part time and only earn about £12K / year but I have been running a ‘hobby’ type business which has been doing pretty well in the last few years and is something I have been doing for close to 30 years. I have built up a lot of repeat clients in this time - it's a health type business.
The issues is that I have never registered this business and never filled out a self-assessment form as just assumed that it was a hobby type thing. I have been making about £30K / year cash in recent years and have advertised online especially on Facebook but I deleted my page upon receiving the letter.
What on earth do I now do to try and resolve this? HMRC want me to declare everything but I would be looking at possibly tens of thousands and I don’t have this floating around. I own my home outright but don’t want to lose this.
Would HMRC believe that I was only making very little (not enough to be taxed on) as I have deleted my Facebook page? Could they really go back as far as 20 years ago into my records?
I’m pretty sure someone in my street has tipped HMRC off.
If anyone has been through something similar, please let me know what to do.
Thanks a lot!

I have to comment, earning £30k additional tax-avoided income is a huge deal unfortunately if you have been earning £42,000 (£12k + £30k) and only declaring the £12k, then you have underpaid about £6k a year!

My advice would be honest is the best policy as being caught lying will only increase your chances of a custodial sentence. being honest you may lose a chunk of your house, if you are found to be dishonest you may lose your house an your freedom.

Pleading ignorance will not help here either, too much and too long for that.

Astar1809

Dave46049 wrote: »

You need to engage an accountant asap.

You say that you only make around 12k a year but you also state you have been "making" 30k a year.

Did you think that you could "earn" £30k a year tax free?

You should be ok as far as VAT is concerned, but you'll probably be due to pay either income tax and NI on that income.

I think HMRC only go back about 6 years - so your tax bill maybe somewhere in the region of £30k - but the best thing to do is GET PROFESSIONAL ADVICE.

Up to 20 years they can investigate if they feel the need to, commonly start with the last 6 and if there is consistent fraud/evasion over those 6 they are likely to go back further.

AnotherJoe

Did you honestly think deleting your Fb page woudl make them forget about it?
Engage an accountant.

Pennywise

Deleting the Facebook page is pretty foolish as you're going to need the business profits for the next few years to pay the tax/NIC (and maybe VAT) plus interest and penalties that you owe. Nor will it achieve anything re HMRC as they'll already have gathered all kinds of "evidence" as to your activities before they formally wrote to you re their investigation.

As for, even now, not coming clean with HMRC and trying to tell them you earned less than you really did - words fail me. At the moment, if you come clean and give them honest information, it's only money. If you continue to lie, you could well be looking at prison time. HMRC aren't going to just take your word for it. They'll ultimately want to see your personal bank/credit card statements, Paypal records, home utility bills, car bills, and do a lifestyle evaluation considering your holidays, etc., compared with your declared income. If you aren't honest, and that just gives them more ammunition against you, they could well just issue "determinations", i.e. their best guess at your undeclared income, which you can't fight against without producing evidence of your own.

Get.An.Accountant.Now. And make sure they're properly qualified/experienced with tax investigation work - don't just pick someone cheap off the internet without checking their credentials - literally anyone can call themselves an accountant, even those without qualifications/experience, so be careful.

csgohan4

OP your best bet would be to get an accountant and own up. Jail time if you don't will be likely.

OP why do you think you do not need to pay taxes?

Glad HMRC caught up with you

hoping4calm

Thanks all for some input here.

I'm terrified of losing so much now hence why I deleted my FB page as it shows several reviews from clients as well as a 200+ client base, many of whom I have built up over the years.

I guess I just assumed it was a hobby and clients were always happy to pay in cash.

I never imagined HMRC would care or be too interested in big companies to chase small fry like me. Surely they would prioritize much bigger companies making millions over me?

I have zero evidence of how much I have been making as all in cash, some of which I spent but banked most of it. I worry that they will want my records, can they really do this?

How much would a good accountant cost? Could they try and convince them that I haven't been making too much?

Why the heck would somebody report me :mad:

spadoosh

hoping4calm wrote: »

Thanks all for some input here.

I'm terrified of losing so much now hence why I deleted my FB page as it shows several reviews from clients as well as a 200+ client base, many of whom I have built up over the years.

I guess I just assumed it was a hobby and clients were always happy to pay in cash.

I never imagined HMRC would care or be too interested in big companies to chase small fry like me. Surely they would prioritize much bigger companies making millions over me?

I have zero evidence of how much I have been making as all in cash, some of which I spent but banked most of it. I worry that they will want my records, can they really do this?

How much would a good accountant cost? Could they try and convince them that I haven't been making too much?

Why the heck would somebody report me :mad:

Well because youre breaking the law. If you find out who it is, let me know so i can go round their house and buy them a drink. :beer:

Hiding things is likely to make things much worse for you as they will assume the worst when making their calculations. Its in your best interest to be as open and honest with them as possible. Otherwise theyre determining the figure that you owe and they have all the power to enforce it.

Theyve got very good accountants, some of the best in the country. They can access more or less anything they need to, so theyll know exactly what your income is, theyll know exactly what you spend and they know exactly what/how people spend their money.

I wouldnt be so sure that youve been reported either. They employ quite a few people to seek out people who evade tax, they use methods highlighted above to ascertain those who are likely to be underpaying and then send out letters wanting to investigate further.

Astar1809

hoping4calm wrote: »

Thanks all for some input here.

I'm terrified of losing so much now hence why I deleted my FB page as it shows several reviews from clients as well as a 200+ client base, many of whom I have built up over the years. Is this reversable? you may need this additional income to pay things off

I guess I just assumed it was a hobby and clients were always happy to pay in cash. ANY amount of additional income is subject to Tax and NI, most people will forgive £50 here or there but £30,000 a year is well beyond reasonable doubt and if I am honest does not sound truthful, I think you knew your were committing tax evasion

I never imagined HMRC would care or be too interested in big companies to chase small fry like me. Surely they would prioritize much bigger companies making millions over me? £30,000 untaxed income is a big deal and like Previouslt mentioned you are defrauding HRMC of £6k a year, again if it were a few hindren quid it is not worth their time but thousands over many years certainly is

I have zero evidence of how much I have been making as all in cash, some of which I spent but banked most of it. I worry that they will want my records, can they really do this? Yes, they can request a full review on income and lifestyle, banking it only firms up the paper trail and leaves you very little wriggle room

How much would a good accountant cost? Could they try and convince them that I haven't been making too much? at this stage I would strongly advice honesty, as the moment you are caught lying they will be like a dog with a bone and much more likely to press criminal charges with a custodial (prison) sentence. you have been caught bang to rights, have some humility and they may be less intrested in criminal charges and just seek what you rightfully owe.

Why the heck would somebody report me :mad:

I would report a neighbor in aheart beat if I felt they were defrauding HRMC, why should I work hard and pay all my taxes to see my neighbor have the bare face cheek to flaunt the rules and benefit 20%-30% more than me, its honestly not a nice thing to do and having a bit more shame/remorse for your actions would go a long way in the investigation and in general day to day life