Advice needed urgently

[northernladuk]

Firstly, if you can't get your family member to get a grip of this you are wasting your breath. In my mind he is absolutely f**d. He's gone umbrella so he's back on HMRC's radar, new address and everything. If he's not submitted any Self Assessments on a personal tax level they will now know. It's also not going to be hard to link him to the business and the debts it is holding either. There is no ignoring this now. If he still won't deal with it then IMO your best bet is to walk away. Only he can deal with this, if he doesn't want to then sod him.

Not sure if it will help but point out that part of the budget there is further discussions about raiding personal accounts for tax owed so burying his head is not going to work. He's going to find HMRC have taken all his money and he won't be able to pay his rent, food or anything. If that doesn't grab his attention then forget about him (I am assuming him by the way, apologies if it isn't).

Don't sweat the numbers, penalties or anything. There is nothing you can do about that.

TBH it sounds like the best thing you can do is dob him in to HMRC. He's still going to pay the same penalties, actually probably less than if you let this just roll on and on the upside you may get a reward of the percentage of tax owed. You can give him that to try and get through this so actually it isn't really a bad idea.

Try and get him/her to take responsibility, if they won't just walk away IMO.

[S45YTH]

Thank you all. And PR1 for your comedy deletings. I am completely upto date with my affairs and can sleep soundly at night.

I have some numbers to work with now. I am positive that 'said part' has not paid anything. I think they may have for part of the first year, but as things got missed, it just snowballed out of control. I totally agree that ignoring it is just going to cause more of a headache as HMRC will catch up eventually and burying ones head will not go well.

My impression is that 100k is owing and they are liable to pay all back.

S

[WordIsBond]

Although it is theoretically possible, it would be very unusual for tax authorities to proceed with collecting CT and VAT from a director. The hurdles in doing so are high, and there is normally no appetite for throwing good money after bad.

OP / friend needs a meeting with an accountant or, probably, an insolvency practitioner. It's a well worn path of woe, and if OPs friend is determined to make a new start then it's probably worth facing up the the pain of bankruptcy or IVA now.

The problem here is the perp isn't just facing bankruptcy, but perhaps prison for tax evasion, right? And he might have a better chance of beating that if he says, "Yes, I messed up bad, life got on top of me, I lost my head and was an idiot, I'll pay it all back." Meaning CT and VAT, too.

No, they probably won't chase him for VAT and CT, but everyone knows he owes the money, and they are a lot more likely to push for legal consequences if he doesn't own up to that responsibility.

Anyone who pulls £2K a week and hasn't been paying any taxes at all gets little sympathy.

@NLUK, since HMRC already knows about this, nothing to be gained by shopping him, unless somehow OP knows something they don't know. And probably it is the reverse, they know more than OP does by now.

[northernladuk]

Thank you all. And PR1 for your comedy deletings. I am completely upto date with my affairs and can sleep soundly at night.

I have some numbers to work with now. I am positive that 'said part' has not paid anything. I think they may have for part of the first year, but as things got missed, it just snowballed out of control. I totally agree that ignoring it is just going to cause more of a headache as HMRC will catch up eventually and burying ones head will not go well.

My impression is that 100k is owing and they are liable to pay all back.

S

I didn't look back at your calcs but did you include up to 100% of the amount owed as fines and possibly interest?

Now you have that number what do you think you can do with it? It could be £1 or it could be £1M. You can't do anything about it.

EDIT : If you think it's morally wrong to report your family member to HMRC to collect a reward PM me. I'll happily do it. I'll split it 50/50 with you.

[alphadog]

Although it is theoretically possible, it would be very unusual for tax authorities to proceed with collecting CT and VAT from a director. The hurdles in doing so are high, and there is normally no appetite for throwing good money after bad.

OP / friend needs a meeting with an accountant or, probably, an insolvency practitioner. It's a well worn path of woe, and if OPs friend is determined to make a new start then it's probably worth facing up the the pain of bankruptcy or IVA now.

According to PR1's estimates, the VAT+CT comes to about 77% of the total tax owed. If HMRC really don't come after him for the VAT+CT, he can count himself very lucky indeed. All the more reason to get him to contact HMRC asap to do the best deal he can.

[northernladuk]

@NLUK, since HMRC already knows about this, nothing to be gained by shopping him, unless somehow OP knows something they don't know. And probably it is the reverse, they know more than OP does by now.

Bugger

[pr1]

I don't understand how HMRC could possibly not go after VAT/corp tax?

surely it's noquestionsasked tax fraud to not pass on VAT you've charged?

it raises the question - why wouldn't we all do it?

[Pondlife]

It's probably a lot simpler maths than we've been calculating.

Take the VAT element off and everything else (minus whatever he paid his accountant) is salary. There's no CT owed. There's almost certainly no arguing min salary and divs as there's been no Self Assessments. It has to be all treated as deemed salary now IMHO.

Logical?

[WordIsBond]

I don't understand how HMRC could possibly not go after VAT/corp tax?

surely it's noquestionsasked tax fraud to not pass on VAT you've charged?

it raises the question - why wouldn't we all do it?

They'll go after him on tax fraud for the VAT/corp tax. They won't try to actually reclaim the money from him because he'll be in prison and bankrupt and they won't be able to recover any of it. By the time he gets out of prison he'll be such a mess that he'll never earn at a high level again, and so there is no point wasting the money to lift the corporate veil.

But if he agrees to pay it all on a payment plan, they just might not throw him in prison, since they'd rather have him paying than have to provide him secure lodging and food as a guest of Her Majesty.

[pr1]

ah, thanks