Reply to: Advice Required on non payment of taxes

[ASB]

The law says (something along the lines of) - you must pay the tax man before you pay anyone else. Sounds like in your case you've been putting someone else first and not paying the tax man.

Not any more it doesn't. HMRC are "just" a regular creditor now. An effect of this though is that they are more aggressive rather than less. Previously they would hang around, secure in the knowledge that they were first in the queue for satisfaction in full before anybody else got a look in.

Of course the OPs actions have made things substantially worse. There could be mutterings of false accounting, evasion, fraud and potentially all manner of nasty things.

[Project Monkey]

The law says (something along the lines of) - you must pay the tax man before you pay anyone else. Sounds like in your case you've been putting someone else first and not paying the tax man.

Yes, get professional advise, but (as you say) you've been overspending I suspect you have some assets you could sell and could make some cost savings. In other words, trade in your new Audi for an old Vectra, cancel your Sky subscription, abandon any hope of another exotic holiday for the foreseeable future and possibly sell your house. May sound harsh, but that's the way the law will look at it.

Sorry about the rant, but this sort of attitude to running a business drives me mad. Its really not difficult to undertstand - don't spend money that isn't yours!

BTW, are you talking Corp tax or personal income tax or both?

[craig1]

I'm sorry but you must be told: you can go to jail - your family is already at risk

HMRC are not to be left at the end of the queue for these matters, they are aggressive when they think they've been diddled out of their money.

You must be much more proactive than leaving a message on one company's phone. It doesn't feel as if you're taking this terribly seriously, as does the above comment.

Start phoning around all recommendations, don't try to find a 'vehicle' first. You must show HMRC that you're trying hard to fix this. To be frank it doesn't look it at the moment.

HMRC should be as high a priority for a company as the mortgage payment is for an individual. No other missed payment can cause you anywhere near so much grief. If people can't do running tax calculations to ensure they've enough money in their company accounts to pay HMRC on demand then they should pay an accountant to do it for them.

[cojak]

All being well I'll be able to come up with some form of agreement with HMRC but if not I can't put my family at risk by not having any cash at al.

Best Regards

I'm sorry but you must be told: you can go to jail - your family is already at risk

HMRC are not to be left at the end of the queue for these matters, they are aggressive when they think they've been diddled out of their money.

You must be much more proactive than leaving a message on one company's phone. It doesn't feel as if you're taking this terribly seriously, as does the above comment.

Start phoning around all recommendations, don't try to find a 'vehicle' first. You must show HMRC that you're trying hard to fix this. To be frank it doesn't look it at the moment.

[Tristesse]

Hi Craig1,

Many thanks for your help. I have spoke with CCCS before and you're right they really did help.

On the personnel side of things I no longer have any debt (unfortunately rather stupidly this was one of the things I used the overpayments for.) The business also has no other credit except to the HMRC.

I've left a message with the IP company to get back to me, would you be able to advise on any rough charges etc? Appreciate it must be dependant on circumstance.

Best Regards

[Greg@CapitalCity]

In the interim is it worth me getting to grips with other payment vehicles etc. For example given how my financial affairs have been running to ensure tax etc are paid going forward should I look to an umbrella?

I think that will all come out in the wash after a discussion with them. The advice you get from an insolvency practitioner will then determine what your next course of action is.

[craig1]

Many thanks I shall give them a call.

In the interim is it worth me getting to grips with other payment vehicles etc. For example given how my financial affairs have been running to ensure tax etc are paid going forward should I look to an umbrella?

All being well I'll be able to come up with some form of agreement with HMRC but if not I can't put my family at risk by not having any cash at al.

Best Regards

HMRC will be mightily miffed if you divert revenue away from a company where they're a substantial creditor and move to an umbrella!

On your personal finances, I linked CCCS above, try them, they will help, they're a charity, not one of those "sell us your soul and we'll pretend to clear your debts" sharks. If you approach your personal creditors with a CCCS Debt Remedy Plan, especially the large creditors, then you'll go in with huge backing. If you're not willing to address your personal finances then I struggle to see how you'll recover the situation, especially if you get benched. This point is just as important as addressing your company debt!

[Tristesse]

Many thanks I shall give them a call.

In the interim is it worth me getting to grips with other payment vehicles etc. For example given how my financial affairs have been running to ensure tax etc are paid going forward should I look to an umbrella?

All being well I'll be able to come up with some form of agreement with HMRC but if not I can't put my family at risk by not having any cash at al.

Best Regards

[Greg@CapitalCity]

If I go for the liquidation route how difficult is this? I am not trying to avoid paying the debt as I realise that it will be transferred to me but would it make it easier to set up a payment plan this way?

I believe its straightforward for you - the insolvency practitioner does all the work. From what I understand payment plans of 2-4 years are routinely negotiated by them, and exceptionally can extend to 5 years. Give them a call - they will give you as much free advice as you like over the phone.

[Jeremiah@RHJAccountants]

Many thanks for all of the replies. You're quite right it is time to get this sorted.

Just some further questions if I may.

HMRC have not contacted me in any way so far, should I wait for them to and try in the meanwhile I come up with an offer or should I be looking to an accountant to contact them now and get things in motion?

I've looked at the figures and whilst keeping money for current liabilities etc to pay the old ones off I would probably only be looking at £500-750 per month (at best case without interest that's almost 4 years), do HMRC give time to pay orders this long?

If I go for the liquidation route how difficult is this? I am not trying to avoid paying the debt as I realise that it will be transferred to me but would it make it easier to set up a payment plan this way?

Thanks again for the advice.

Best Regards

Well you have done the right thing in starting to act now even if it is quite late!

I would spaek to an accountant or insolvency practitioner.

As you will need professional and specialist advice to help you liase with HMRC.

This can be sorted but i would act as fast as you can as the more your head is buried in the sand the worse it will get!

[Tristesse]

Many thanks for all of the replies. You're quite right it is time to get this sorted.

Just some further questions if I may.

HMRC have not contacted me in any way so far, should I wait for them to and try in the meanwhile I come up with an offer or should I be looking to an accountant to contact them now and get things in motion?

I've looked at the figures and whilst keeping money for current liabilities etc to pay the old ones off I would probably only be looking at £500-750 per month (at best case without interest that's almost 4 years), do HMRC give time to pay orders this long?

If I go for the liquidation route how difficult is this? I am not trying to avoid paying the debt as I realise that it will be transferred to me but would it make it easier to set up a payment plan this way?

Thanks again for the advice.

Best Regards

[craig1]

You're in trouble but it is often fixable if you work through a professional. HMRC's debt collectors will just try to bully you if you do it yourself, an accountant with company distress experience will know how to work with them to get you a plan.

You'll probably have to agree to pay a substantial part of your company's net income but as long as you're honest about it you'll just have to live through a lean period while it's paid back.

If you're a contractor on a rate that isn't embarrassingly low then you should be in a position to put away a good lump of your income, never mind having to over-dividend to cover a spending lifecycle. Can I suggest you visit CCCS (or similar), they're free and can help you.

[Greg@CapitalCity]

Firstly I would suggest you get your head out of the sand and speak with an insolvency practitioner. A formal liquidation may be your best route, and they will be able to put themselves between the HMRC and you.

Try Insolvency Practitioners - Lines Henry - these guys have an area of their business who specialise in contractor company liquidations.

[DonkeyRhubarb]

Would he be best off just going to a regular Accountant or someone who specialises in negotiating with HMRC?

I have put a few people on to Tax Avoidance, Tax Fraud, Tax Evasion - HMRC Tax Investigation Expert. They ain't cheap but I've heard they get results.

[malvolio]

Hi All,

This is my first post on the forums which I've been looking through for a while and I wondered if anyone could possibly offer some advice.

Background first:

I've consulting for about 4 years through my limited company with very little breaks in work (thankfully), without going into too many details I'm the only person working in our household during this time (wife is a stay at home mum).

Within the last two years our costs have gone up without too much movement in my day rate and frankly we've been over spending. This has left a big gap in the company finances as I've been drawing far too much money from it (illegal dividends etc). It's got to the point now where I have no realistic chance of paying of the debt I owe to the IR (around £30,000).

Part of the monies have been overdue for sometime (over a year) with the rest and more becoming due soon.

If possible please could I get advice on some things:

I need to keep earning, are HMRC likely to just freeze my accounts? Should I move to another ltd company or perhaps an umbrella to make sure I can still receive an income?

Should I try and somehow try and get another time to pay plan in place (not sure if this will work the last one didn't as I lost work for about 2 months).

Could I be prosecuted? Appreciate the HMRC could probably transfer the debt to me personnaly, would I be able to pay this back over time or would I have to / be made to declare bankrupt?

Any advice I could get would be most helpful as I've sort of burried my head in the sand for a while and now I realise how stupid i / things have got.

Best Regards
Tristesse

With that history, I would suggest you ain't going to get any meaningful advice from a bunch of amateurs on an internet forum. Changing you payment vehicle won't help, you need to sort the existing mess.

Go get a good accountant and get their professional advice. Best case, you (and they) work out an arrangement with the Revenue to get you back on track. Worst case, you are declared bankrupt. Really worst case, you go to prison for evasion.

Does that help focus the mind?