tax debt rising

[superdad220]

It might increase the debt it might reduce it, it might increase it - depends on his income. To clarify my previous comments it would have been been better if i had said may be a criminal offence. Slight change in emphasis but it still does not remove your bil from the obligation to submit tax returns. I await your brother in laws call with interest. Until that time I should be grateful if you would regard my comments as general advice only - I would not want to advise you specifically until I had done a full fact find.

[deepindebt]

Thanks superdad,

My brother in law went to his local CAB centre in reading yesterday and was advised that he should send his tax returns in as soon as possible, and that would bring his overall debt down. He has not got a clue how to fill them in and is looking for a good accountant. He has rand around a few places but they are very expensive and he is trying it hard to fill them in himself.
I will of course contact him later today and see what he next plans to do. All he wants to do is return the tax returns that he did not fill in for the past few years

[robbob]

Hello

I would get your brother in law top confirm with the revenue as to which returns need to be completed as far as his post bankruptcy affairs are concerned.
If he was discharged in 2003 the actual date of bankruptcy would have been quite a time before this so it is possible 6 years returns neeed to be done.

I think the most important thing to do in cirumstances like this is to get the required returns completed as soon as possible - until such time the figure being chased are pure estimates and may be many orders of magnitude greater that what is owed. Until he starts to put future returns in on time and start saving some money for tax (presuming he has anticipated liabilities) he will always be chasing shadows.

As far as quantifying the level of debt
What was the nature of his business?
Does he know what his income and expense levels were - approximately?
Did he had tax deducted from his income?

Note every self employed individual must complete tax returns and alot do not earn vast sums of money, he does need to understand HE MUST submit returns on time.If he is short of cash he should make more effort to keep better records so that costs can be minimised if an accountant is needed- a little extra effort costs nothing. If he has kept anything like proper records and he does not have a massive turnover it should be reasonably straightforward to bring his affairs up to date.

I hope my comment do not sound too harsh but we see so many clients in situations like this where by not making any effort themselves to provide neccessary information they make it almost impossible for others to help them.

[deepindebt]

Thanks robbob for your help and advice and I totally understand what you are saying. My brother in law was working as a self employed driver for a parcel company. He was only working part-time, his employers were a small family who have now gone bankrupt themselves. My brother in law was not making millions and he did bury his head in the sand, not good I know now that it has bit him in bum.

He was turning a loss over each year making between £5k and £6.5 a year. He only used to delivery work when he was needed, nothing permanent. It was cash in hand, as he did not earn that much he stupidly thought it unnecessary to declare, big no no I know.
He was chased by the Inland Revenue and fully co operated with them, he tried to negotiate with them over a year and at one time was willing to pay over a £100 a month towards his tax debt. They did not listen and eventually took him to court with an estimated sum they made of £6k'ish and the court was angry with Inland Revenue as to why they did not accept my BIL's offer. The court then allowed my BIL to pay £15 a mth towards his tax debt. Problem is interest is being added each mth and at the mo debt stands at £7k'ish.

So if he sends his missing tax returns now showing a loss each year would it bring this £7k'ish sum down? I am not good at filling in details and can only ask

[robbob]

Hello deep

How it normally works is that eventually the tax office get fed up when someone refuses to submit tax returns.
They then raise a determination of tax due which will stay in place until a return is submitted. This figure often bears no relatiojn to amount actually payable.
This normally has the desired effect of forcing the individual to file the return or they will end up in the situation your brother appears to be in where they are quite possibly chasing him for money that was not payable.

If he needs to make estimates to get the returns in so that any determinations are overturned then this may be the best course of action.
In all likelyhood if his profits are less than the personal allowance and he has no other forms of income then the tax and penalties will be reduced to Nil for that year - although if has has not paid his weekly NI stamp then there may still owe this - this is only a couple of quid a week.

Note a tax return is an important document that needs to be completed as accurately as can be - just saying he has losses does not mean that he does have.
I would have presume he has needed some money to live on and some expenses (NI stamp,household bills,tax bill etc) are not allowable for tax.

[deepindebt]

Thanks robbob, for making such sense. I have since spoken to my BIL and he has got someone at the CAB to help him fill in his tax returns for the past 5-6 yrs.

[deepindebt]

My BIL was taken to court by HMRC because he did not fill in his self-employed assessments on time. In July 06 judgment was entered against his for £10.528.60.
He was made bankrupt in July 2000 and discharged in May 03. In March 08 he received a letter from HMRC saying that £4,194.43 should have been claimed in his bankruptcy so his debt was reduced to £6,084.34.
He checked the register of on-line judgments in Aug 09 and it shows that his debt is marked as un-satisfied for £10.528.60

He has many many complaints against HMRC and his is currently going through their complaints procedure. I would like some advice, should not all of his debt of £10,528.60 been claimed in his bankruptcy? and not only £4,194.43?

He was fined for not returning tax records from 1999-2004, yet he was made bankrupt in 2000-2003?

Please could someone please advise as he needs to investigate this as much as possible as he wanted to has his judgment set-aside as he believe that HMRC have made serious and critical errors in calculating his debt.