The VAT Man

[McDermott]

Hi

Hoping somebody could give me a bit of advice.

Basically the problem is that the VAT man has come knocking on my dads door. 3 or 4 years ago he was working as a subcontractor to a main subcontractor on a building site as a plasterer. My dad usually works on his own, however as this was a particularly large job he brought along 5 or 6 plasterers and was getting their wages paid directly to him, which he then distributed accordingly. Obviously over a sustained period of time this added up to a large amount of money and as such took him over the point of which you have to begin claiming/paying VAT.

Unfortunately my dad naively and ill advised by his accountant was unaware of the VAT brackets and the procedures did not claim VAT from the company that was paying him. This company now is no longer trading so he has no recourse to go back and claim the VAT that he should of claimed originally. My Dads books now show that for those 2 years he went over the VAT threshold and as such the VAT man is claiming that he owes in the region of £40k.

My Dad is not a Ltd company as such cannot go bankrupt. My parents have got zero savings and are currently living ''hand to mouth'' struggling to pay the mortgage (which they have fallen behind on a couple of time in the last year or so). They do have around 50k equity in the house but if they are forced to sell this they would basically be made homeless as I doubt very much that they would be able to get a mortgage for another house at their age and in their financial situation

Obviously this is causing my parents a great deal of worry and stress, I realise my Dad has been naive and ignorant and this is no excuse especially where the VAT/Tax man is involved. Has anybody got any advice?

[Brian Clarke]

Did your dad make a profit on the work done by the other plasterers, or was he simply acting as a paymaster, passing on to the plasterers the money the contractor paid for their work?

What income did your dad put on his tax return? Did he just declare his own earnings, or did he declare the earnings of all the plasterers and then claim as an expense the cost of paying the others?