Help with a very, very bad situation

[steve_628]

Hey people

I am after some help, guidance and advice for a friend of mine who has recently confided in me. With respect, I'm not here to receive nasty comments or lectures, I just need some direction from the experts.

A good friend of mine recently tried to commit suicide, and once recovered confided in me that he is approximately 150K in debt. Part of this is due to HMRC. From the details I have been given (he is self employed), he hasn't submitted anything to HMRC (I'm not sure if they have requested anything) let alone paid any tax or NI since 2001. He has moved address several times and therefore I guess HMRC dont know of his whereabouts.

He is no longer working and has no assets (in fact, he's currently sleeping on another friend's sofa). His problems have been made worse as he believes he cannot take PAYE employment or claim benefits (he hasn't worked for a couple of years, making his credit card debit sky high) as HMRC will locate him.

I guess what I need to know, to be able to help him, is what the potential outcomes are. Not only with HMRC and penalties (although he has ZERO money) but the possibilities of declaring himself bankrupt or the like.

I really appreciate your time and look forward to your advice.

Thanks

[robbob]

Hello steve

Re possible bankruptcy - he could try contacting CCCS for some free advise.
It is quite possible that bankruptcy is the best option.

http://www.cccs.co.uk/faqs/Bankruptcy_Advice.aspx

I cannot think of any reason why he could not take a job or sign on. If he has not paid enough stamp to qualify for jobseekers he will probably qualify for income support and possible help with housing costs.
ring the jobcentre or cizitens advise and they should be able to advise.

He should write a letter to the inland revenue stating the basic circumstances of when he ceased his estimated income levels,confirmation he has no moey to pay for accountant,confirmation he has had no other income and the troubles he has had. If returns need to be sbmitted enter estimated figures as best he can and submit returns with appropriate notes.

If he does go bankrupt in all likelyhood he will be able to put all these problems behind him and get on with his life, if you are able to help arrange appointments and discuss details with appropriate bodies this may be of help to him if he is not in the right state of mind to sort everything out HIMSELF.

[One Eyed Jack]

I agree with the bit about declaring himself bankrupt. He is bankrupt so he might as well go to the local court and declare himself such. There is a fee payable so you might need to lend him a few notes.
I don't however see any point in writing in any detail to HMRC.

[steve_628]

Cheers lads

The reason he wouldnt claim benefit is that way the inland revenue would then know his where abouts and start, I presume, an investigation.

If he declared himself bankrupt, which he literally is, would all debts, including the one to HMRC, be written off even if he hadn't contacted them before hand?

[robbob]

Hello Again

I think that the only way to be certain these events are behind him is to be as honest as possible,by avoiding the revenue they may come along at a later date and take further action.
It is not that likely that the revenue would start an investigation into a bankrupt individual and to me it is more likley that they would be tough on anyone they catch up with rather than somone who came clean to them initially.
It is likely that all debts would be w/off but it is best to get specific advise from appropriate source so that all the facts are know by the person giving any advise.

[alternativeview]

To be honest I somehow doubt that a person who has no money or other assets and has recently attempted suicide is likely to be that high up on HMRC's priority new investigations list. A huge number of people have not paid tax or NI since 2001 and if everyone one of them was to face in investigation when they took a job or claimed some benefit that would take up all the resources available.

While in a nice cosy world everyone would come clean about every last thing they may have done the reality is completely different.

A homeless person seeking to take their own life is in need of help. If that help is the form of benefits and/or a job I would advise them to grab it with both hands.

I understand best professional advice would be to tell the truth but I think that is on a case by case basis. Clearly this person is not going to submit a load of old tax returns "with (or without) appropriate notes" but that should not mean they need to spend their life hiding.

Cheers
AV

[IanW(fr)]

Hi,

Your friend might wish to contact The Bankruptcy Association

http://www.theba.org.uk/index.php

http://www.theba.org.uk/contact-us/

John has been advising people for some 25 years and knows only too well the realities of the situation.

I.

[wamstax]

I feel that to be absolutely sure about the future you would really need to help your friend advise all his potential creditors so that if (or more likely when) he goes bankrupt all debts are taken into consideration.

if you consider the HMRC manauals around the following link you will see that on occasions they might settle matters for what your friend can afford http://www.hmrc.gov.uk/manuals/emmanual/EM6237.htm

regards and I hope this helps