Taxes not paid and Company dissolved. What can I do?

Michele1800

Hi folks!
First of all, let me say I am not a native English speaker, so it's likely that you'll find several mistakes in this thread. I deeply apologise for that. I'll do my best to make myself understood. That said, I have worked for a restaurant as a chef since June 2017. I stopped working for them in May 2018 and resumed employment in August 2018. I was not asked to sign a new contract. I didn't receive any tax calculation letters in 2018, but I thought that was due to me being away from the country and having subsequently changed address. When I didn't receive my tax calculation letter after April 2019 I became suspicious and phoned HMRC. It turned out that HMRC has no records of contributions being paid on my behalf for tax years 2017-2018 and 2018-2019, as if I hadn't worked at all. I reported that to my employer and he said he would have investigated into the matter. Apparently, there were a dozen of people involved and we were all in the same boat: deductions have been made from our wages but the money has been retained instead of being forwarded to HMRC. I was asked to be patient: everything would have been sorted soon. After two months nothing had changed, so I resigned from the company.

Before going away my boss agreed to pay the whole amount of taxes I was claiming for 2017-2018 cash in hand straight to me. He said it was impossible for them to pay taxes at that time (August 2019) for the tax year 2017-2018. Therefore, he was giving cash to me so that I could deal with HMRC myself. He said tax year 2018-2019 would have been fixed soon as well. That didn't happen and he stopped replying to my messages afterwards. So I lodged a claim to the Employment Tribunal. At the hearing my ex boss said his company cannot be held responsible for taxes not being paid, because I was not employed in that company between June 2017 and April 2019. I was employed by another company, which was the owner of the venue and used to recruit workers for the restaurant. My ex boss' company was only managing the restaurant on a lease basis and had nothing to do with employees and payrolls. In March 2019 this company was dissolved and my ex boss' company started to deal with employees and payrolls. The PAYE reference number is indeed different on the pay slip and starting from April 2019 there are records of taxes being paid, but nobody told us my ex boss' company had taken over nor we have been presented with a new contract. Moreover, every time we used to have a problem with our wages (e.g. working hours and holiday entitlement not being correctly paid), we would speak to the aforementioned boss and he always sorted everything for us. Hence, de facto he was deeply involved in HR and payroll administration.

Now the question is: what can I do fill the gap in my HMRC's records? I should bring that other company into the dispute, but since it has been dissolved it's highly unlikely they will defend the case. And even if the judge awards to me the sum I am claiming or forces that company to pay the money to HMRC, it's highly unlikely there are assets left to do so. I was told those are smart people who dissolve company every year or so to deliberately avoid paying taxes. How can I have the issue solved then? I should have applied for settled status under the EU settlement scheme in July this year, but since there's a 2-year gap in my contributions I cannot prove I have lived and worked in the UK for 5 years continuously. The Home Office would assume I was away from the country.

Thank you very much in advance for your help!

General_Grant

Michele1800 wrote: »

Hi folks!
First of all, let me say I am not a native English speaker, so it's likely that you'll find several mistakes in this thread. I deeply apologise for that. I'll do my best to make myself understood. That said, I have worked for a restaurant as a chef since June 2017. I stopped working for them in May 2018 and resumed employment in August 2018. I was not asked to sign a new contract. I didn't receive any tax calculation letters in 2018, but I thought that was due to me being away from the country and having subsequently changed address. When I didn't receive my tax calculation letter after April 2019 I became suspicious and phoned HMRC. It turned out that HMRC has no records of contributions being paid on my behalf for tax years 2017-2018 and 2018-2019, as if I hadn't worked at all. I reported that to my employer and he said he would have investigated into the matter. Apparently, there were a dozen of people involved and we were all in the same boat: deductions have been made from our wages but the money has been retained instead of being forwarded to HMRC. I was asked to be patient: everything would have been sorted soon. After two months nothing had changed, so I resigned from the company.

Before going away my boss agreed to pay the whole amount of taxes I was claiming for 2017-2018 cash in hand straight to me. He said it was impossible for them to pay taxes at that time (August 2019) for the tax year 2017-2018. Therefore, he was giving cash to me so that I could deal with HMRC myself. He said tax year 2018-2019 would have been fixed soon as well. That didn't happen and he stopped replying to my messages afterwards. So I lodged a claim to the Employment Tribunal. At the hearing my ex boss said his company cannot be held responsible for taxes not being paid, because I was not employed in that company between June 2017 and April 2019. I was employed by another company, which was the owner of the venue and used to recruit workers for the restaurant. My ex boss' company was only managing the restaurant on a lease basis and had nothing to do with employees and payrolls. In March 2019 this company was dissolved and my ex boss' company started to deal with employees and payrolls. The PAYE reference number is indeed different on the pay slip and starting from April 2019 there are records of taxes being paid, but nobody told us my ex boss' company had taken over nor we have been presented with a new contract. Moreover, every time we used to have a problem with our wages (e.g. working hours and holiday entitlement not being correctly paid), we would speak to the aforementioned boss and he always sorted everything for us. Hence, de facto he was deeply involved in HR and payroll administration.

Now the question is: what can I do fill the gap in my HMRC's records? I should bring that other company into the dispute, but since it has been dissolved it's highly unlikely they will defend the case. And even if the judge awards to me the sum I am claiming or forces that company to pay the money to HMRC, it's highly unlikely there are assets left to do so. I was told those are smart people who dissolve company every year or so to deliberately avoid paying taxes. How can I have the issue solved then? I should have applied for settled status under the EU settlement scheme in July this year, but since there's a 2-year gap in my contributions I cannot prove I have lived and worked in the UK for 5 years continuously. The Home Office would assume I was away from the country.

Thank you very much in advance for your help!

Were you issued with payslips each time you were paid? Have you kept them?

Dazed_and_confused

Payment of tax and National Insurance contributions is a matter between your employer and HMRC. It is not something you need to be concerned about.

Do you mean they haven't reported your earnings and any tax or National Insurance deducted to HMRC?

Michele1800

Yes, I kept all of my pay slips. I used to be paid fortnightly

Michele1800

Exactly. The money has been kept by the company instead of being paid to HMRC as contributions on our behalf

Dazed_and_confused

The money has been kept by the company instead of being paid to HMRC as contributions on our behalf

You don't need to be concerned about whether the tax and National Insurance has been paid or not. That is purely a matter between your employer and HMRC.

Now if they have never reported your earnings to HMRC that would be another matter. Of much more concern.

Michele1800

My personal tax account clearly states HMRC has no record of me being employed from 6th April 2018 to 5th April 2019. That means my earnings haven't been reported to HMRC. HMRC thinks I haven't worked at all in that timeframe, despite having had contributions regularly deducted from my wages

Dazed_and_confused

And that is the problem, not whether any tax or National Insurance has been paid.

Having the payslips sounds like a promising start. You should send photocopies (keep the originals safe) to HMRC with a letter explaining what has happened and ask them to investigate why the employer has not reported the earnings.

Asking about whether the tax and National Insurance has been paid is likely to be counter productive as that really isn't any of your business.

Floop

Actually HMRC can ask you to pay the money. Keep hold of your payslips so you can prove that you understood that the money was being passed over. Sending copies to HMRC might prompt them to investigate further, especially if the companies were clearly linked (eg same trading name/address, directors in common).

I’ve seen this happen a lot of times, they’re scammers basically. Using a separate company to process payroll and then dumping the debt and any future liability.

If the company is dissolved then you have no recourse against it - it would have to be restored to the register by a Court before any Insolvency action could be taken. If there are no assets it simply isn’t worth the time and expense.

Michele1800

Paying money to HMRC is fine with me. As I said, I managed to obtain the full amount of taxes that should have been sent to the government for tax year 2017-2018 cash in hand from my previous employer. So I wouldn't lose anything. What I'm really concerned about is HMRC charging me of tax evasion or something and being summoned in a criminal court. Could that happen?

Michele1800

Actually HMRC can ask you to pay the money. Keep hold of your payslips so you can prove that you understood that the money was being passed over. Sending copies to HMRC might prompt them to investigate further, especially if the companies were clearly linked (eg same trading name/address, directors in common).

I'm afraid the two companies are not linked in any way. Different names, directors and legal addresses. One is even based in London, despite the restaurant is located in Glasgow.