Partner hasn't paid any tax for years

[ppecan]

I'm sorry, this is very long and not very clear. I am in a bit of a state of shock.

I found out yesterday that my partner of 6 years hasn't been paying tax or NI (for the last 20 years). He says that he wants to sort this out with HMRC, but he doesn't know how to go about it.

Being me, I've been online, googling info and I've found him 3 telephone numbers to call (CAB, TaxAid and the HMRC confidential line)but he won't call any of these. He says that he has to work out what to tell them. I'm a bit shocked to realise that he's not planning on telling them the whole truth.

As far as I can see, if you approach HMRC you need to be totally honest(not least to avoid retrospective prosecution for tax evasion), but he is being very stubborn. He seems to think that HMRC will be satisfied with partial disclosure and a story about being partly supported by his parents for years. I think that once they start investigating, they won't be satisfied until they know everything.

The issue is complicated by the fact that he has been working for his Dad for most of the last 20 years and his Dad hasn't paid tax and NI for him (and I suspect not paid any at all) and he doesn't want to drag his Dad into the problem. My partner is now working for himself (last 18 months) and still hasn't paid any tax/NI. He hasn't had any work for the last 5 months and I've been supporting him. I've been trying to persuade him to sign on to get NI contributions paid (knowing that he wouldn't qualify for benefits as I earn a very decent wage). I was annoyed with him that he hadn't done this, but now realise why!

He has never had any payslips from his Dad and the work he's done on his own for the past 18 months (only a couple of very small jobs) has been done off the books. He's never had much money and I suspect that his tax liability wouldn't have been very large at all, if only he'd paid it when he should have done.

My questions will seem selfish, but I am worried about the impact on me and my financial situation. Particularly as he seems determined to either do nothing, or take action that will make the situation infinitely worse.

1. What's his best course of action and the most likely outcome?

2. If he is investigated by HMRC, will they want to talk to me? I have already told him that I won't lie about this, but want to know how likely it is that I will be approached so that I can try to convince him to come clean.

3. Will I be investigated if he is? My tax affairs are beyond reproach, but any investigation would be very upsetting at the moment as my Father is very ill and I need to concentrate on that.

4. Will I have any liability for his debts? We live in my house (in my name and bought before he and I met), all the bills are in my name and we have separate bank accounts.

[mullet]

I don't think that your questions are selfish at all - you are being pragmatic. You need to find him a wise accountant who has experience of the darker side of HMRC.

1. What's his best course of action and the most likely outcome?

A typical response from the regulars here (and my own feelings) would be to confess everything and come clean. I guess he wants to tell them only about the past 18 months, to try and keep his parents out of it. Something along the lines of "they supported me until 2009 and since then I've been going it alone". A naive Inspector might accept that, but they generally want to know the history over the past 5 or 6 years so that they can see the full picture. You are right - looking at the past 2 years will lead them to the earlier years.

2. If he is investigated by HMRC, will they want to talk to me? I have already told him that I won't lie about this, but want to know how likely it is that I will be approached so that I can try to convince him to come clean.

It is very very unlikely that they would want to speak to you. They sometimes do joint interviews, typically when they are looking at personal and private expenditure and (a) everything goes into and out of a joint account and (b) the wife manages/controls the finances. The situation where a guy "hands over" (whether literally or through the bank) his money each week or month and gets his own "pocket money" still happens.

3. Will I be investigated if he is? My tax affairs are beyond reproach, but any investigation would be very upsetting at the moment as my Father is very ill and I need to concentrate on that.

Only if HMRC can identify the risk that tax has been lost from you. They don't tar the entire household with the same brush. So an almost definite "no".

4. Will I have any liability for his debts? We live in my house (in my name and bought before he and I met), all the bills are in my name and we have separate bank accounts.

Absolutely not. An unscrupulous Inspector might "invite" a person to settle a spouse or partner's debts, but a simple refusal would send him/her packing.

[robbob]

I think there is 2 separate issues here

Firstly get the current period of self employment sorted out, simply advise of the start date for self employment and try to collate the required information to get the self assessment returns up to date.
If he commenced trading in May 2009 then there are no overdue self assessment returns as the deadline for completion of the tax return up to 5/4/2010 is 31st January (presming the retunr is done online)
There will probably be a £100 penalty charged for late registration.
Don't delay registering as it takes time for the 10 digit tax reference number to be issued and a return cannot be filed online without this.

Note things may be more complicated if your partners self employed income exceeded the vat threhold - approx 70 turnover in any 12 month period.

It would probably be sensible to get a local accountant to sort this out if neither of you has experience of working out self employed profits for tax purposes.I cannot stress how important it is that your partner is scruplulously honest from now on when it comes to declaring income and keeping records.If there is a material chance he may get into trouble for earlier indiscretions then effectively by the time the revenue ever look at what is now his current situation they will not be as tolerant of any ommissions if they know he has deliberately not declared items before.

Secondly - its hard to offer much practical advise without knowing a full histroy of what your partner has been doing for the last 20 years. If he has effectively been an employee of his father for a long period of time there is a distinct possibly that he has done nothing wrong for this period.Often employees don't have tax returns or declarations to make. Obviously if he has claimed any benefits things may be different. The sensbile thing is to make as full a disclosure as possble - for any periods where he thinks there may be a tax liability, again a decent local accountant should be able to give some advise on how to proceed.

In some respects if he has no assets there is not much "value for the taxpayer" throwing the book at him if there is little prospect of reclaiming any funds. Unfortunately without a full disclosure the taxman will be able to come along at any later date and throw the book at him at that stage, so a full discoluse is the only way that i can see him starting the next chapter of his life as a normal individual "within the system"

Hope my rambings makes some sense.

Apologies for any spelling errors as my available time is a little limited today.

[ppecan]

Thank you both, robbob and mullet, for your really kind and helpful replies. He has never claimed any benefits, so at least that part of the picture is clear. I feel a bit more positive now. I'm going to show him what you've said and hope that he'll start to listen to sense. He might if it's coming from someone other than me! Thank you again. I'm very grateful that you took the time to help.

[Dollygypsy]

I am in a similar situation myself, I hope it was sorted, what was the outcome?