Serious Tax Issues,Need Advice Urgently

[TaxiForHire]

Hi Guys

I hope you can help me with a problem i have so here goes.

 

In 1993 i registered as a self employed taxi driver and claimed Family Credit for my partner and our 2 kids.All went well until the next year when due to to severe financial troubles I never paid my tax bill.I had hoped to pay it later in the year but started a messy break up so other things got in the way.

The Tax Office sent letters for non payment with fines of £100.00 every so often so that the final bill came to well over £1000.00.

As i said before due to relationship breakdown i had moved out so my partner told Tax Office that I no longer lived there and after a while all their letters stopped.

Anyway,in 2000 we got back together again but because of my worry about about all the back tax and NI that i owed,we didnt tell them and my partner continued to claim as a lone parent.

Now before any of you start to demonise us for this let me just say that we are not the first nor will be the last to do this type of thing,we are not proud of what we have done,and it was only the fear of my tax evasion that stopped me from coming clean.

However,we know its wrong and cant go on forever so want to make a fresh start.We both work and dont wish to claim anything now but I am really worried about the length of time that I havent paid tax & NI for.

I cant believe its went on so long and cant see any way out of this mess.

I will really appreciate any help and advice before i make the call to Tax Office.

Thanks guys.

[tiglet]

I think the best thing is to make a clean breast of things. YOU WILL get caught eventually and benefit fraud is a crime.

 

However, i should imagine they will look more sympathetically on your situation if you confess to them and are prepared to pay what you owe. if they did take you to court, it would certainly work in your favour.

 

It would perhaps be worthwhile speaking to a solicitor and getting them to initiate first contact for you and arrange a meeting where they can attend.

 

I'm not condoning anything you ahve done, but I'm not judging it either - people get themselves into messes very easily that others cannot understand.

 

Kudos to you for wanting to sort this out but you should be aware of the implications of what you and your partner have done i.e. benefit fraud and tax evasion.

 

There is a possibility of a custodial sentence here, as i am sure you are aware. Do you have up to date accounts which you could take with you?

 

You may be afraid of the outcome of this (and it is a serious matter) and may think it's better just to leave it and not own up. However, a neighbour or friend could easily grass you up and then you would be in even deeper trouble than if you fessed up and tried to sort it out.

 

i hope this helps - let us know how you get on.

 

Tigs x

[slick132]

Hi Taxi and welcome to CAG,

 

This must be weighing very heavily on you and all credit to you for wanting to sort it out.

 

Tiglet is absolutely right that the way to go is to 'fess up before you get "caught" out in some way. While, technically, there is the chance of prosecution, this is really very unlikely. You will, however, have to pay tax and NIC which is owing the HMRC.

 

Also, if you are still claiming any benefit you think you should not, stop claiming it now. You can be vague about the reason if you have to until you've decided exactly how to handle the situation as a whole.

 

Rather than speaking to a solicitor, and using them as a means of disclosing to HMRC and DWP, I would suggest an accountant. They can help you produce figures for HMRC and will be better experienced in dealing with tax related disclosure. They should also be able to help with deciding if benefits have been wrongly claimed.

 

If they think there is a need, you can still take solicitor's advice as well.

 

Don't call the Tax Office until you have taken professional advice. An accountant may feel it better if they approach HMRC first on your behalf although you'll probably have to attend an interview with HMRC at some stage.

 

If you have a friend or collegue who can recommend a good accountacy practice, meet with them (initial meeting should be free), rather than picking an unknown firm from the phone book.

 

Good luck with this and come back with any queries.

 

Slick

[Goldlady]

From my experience with tax/benefits etc there is definitely a middle ground as far as the tax/benefits people are concerned. If you approach them, and I do suggest you have your facts and figures in order first, the chances are that they will be OK.

 

For example, one of my clients had an employee who was claiming income support, using a false NI number and working only 10 hours a week, and not declaring her partner. The fraud people caught up with her and when it all came out in the wash she would actually have been better off if she had declared everything as she would have received tax credit in excess of the income support she had received. So rather than prosecute her (which they could have done) they have helped her sort it all out.

 

Let's face it, I bet you haven't got a villa in the South of France, three Mercs in the garage etc. Have you any idea how much profit you have made (I presume you are still taxi driving)?

 

If I can help you I will.

 

Goldlady

[Filthy Monkey]

Perhaps I'm being a bit thick here, but I'm not quite sure I understand exactly what the problem is here. Are you saying that -

 

1. You haven't paid any tax since 1993

 

2. You haven't paid the outstanding tax bill from 1993

 

3. Your partner claimed benefits as a lone parent whilst you were living together

 

Please be more specific about the actual problem and I'm sure somebody will be able to provide more focussed advice

[tiglet]

I think they are the issues the OP is raising.

[TaxiForHire]

Thanks for all your replies guys,really appreciate your input.

 

Having taken a good hard look at my situation I am gonna bite the bullet and hope for the best,as I said in my post,this cant go on as the stress will give me a coronary!

 

There is a possibility of a custodial sentence here, as i am sure you are aware. Do you have up to date accounts which you could take with you?

Tigs x

It has been the thought of going to prison which has stopped me from sorting this out.Also the amount that I will have to pay back;there is no way on Earth I could afford to pull out what they would want.

I have accounts from 1993-1996 only and from 2000-present.Although these are obviously un-audited,ie personal records of earnings,expenses etc.

 

Let's face it, I bet you haven't got a villa in the South of France, three Mercs in the garage etc. Have you any idea how much profit you have made (I presume you are still taxi driving)?

If I can help you I will.

Goldlady

 

Hi Goldlady,

If I had a villa in SoF I wouldnt be concerned about the Inland Revenue lol, I just have a semi in the UK but would hate to trade it for a 12x6 with steel windows:o

I roughly make the same every week which is about £200.00 clear after all my expenses such as car payment,diesel,repairs,etc.

And yes I am still driving a taxi so your presumption is correct.

I really appreciate your offer of help as you obviously have some sort of experience with this type of thing so thank you.

 

Perhaps I'm being a bit thick here, but I'm not quite sure I understand exactly what the problem is here. Are you saying that -

1. You haven't paid any tax since 1993

2. You haven't paid the outstanding tax bill from 1993

3. Your partner claimed benefits as a lone parent whilst you were living together

Please be more specific about the actual problem and I'm sure somebody will be able to provide more focussed advice

 

I really dont understand why you posted this reply:-?

You seem to be the only one that has not understood my position.

I think i have made it quite clear in my first post what my problems are, why and how they occurred,and my current situation now.

I dont feel that I can be more specific without going into personal details which I am not prepared to do.Whilst I do appreciate all replies,I do hope that if you cant offer any meaningful advice then its best to just read future posts without leaving unhelpful comments.

 

Thanks guys

[Guest wino]

As the previous posters have said, you need to get this sorted. Do you know a good accountant? Ask around and get all your figures together. The accountant should liaze (sorry can't spell:o ) with HMRC on your behalf. If you get called in to speak to someone then ask the accountant to go with you. HMRC will obviously want what their owed but you may be able to arrange a repayment plan with them. If you leave it and they find you they will not be so sympathetic.

 

It has to be sorted so deep breathes and good luck:)

[tiglet]

Hi taxi

 

I think a custodial sentence is much more likley if you don't bite the bullet - you've been given some more good advice by others here so good luck and let us know how you are doing as you progress or if you need a bit of moral support.

[Filthy Monkey]

You seem to be the only one that has not understood my position.

I think i have made it quite clear in my first post what my problems are, why and how they occurred,and my current situation now.

I dont feel that I can be more specific without going into personal details which I am not prepared to do.Whilst I do appreciate all replies,I do hope that if you cant offer any meaningful advice then its best to just read future posts without leaving unhelpful comments.

 

Actually, no, you didn't make it quite clear enough for me, which is why I posted the questions. I can't tell from your original post if you only missed tax payments for one year or hadn't paid any tax since 1993, how long your partner claimed family credit for as a single person after you got back together and whether or not you were still doing the same job, although I guessed from your user name that you were.

 

Your problem sounds quite serious and, due to my job, I am in a position to find out a lot of useful information from our financial and legal teams, many of whom deal with the tax office on a regular basis, which is why I asked you to be more specific. So that I could do some research and offer you meaningful advice.

[TaxiForHire]

Actually, no, you didn't make it quite clear enough for me, which is why I posted the questions. I can't tell from your original post if you only missed tax payments for one year or hadn't paid any tax since 1993, how long your partner claimed family credit for as a single person after you got back together and whether or not you were still doing the same job, although I guessed from your user name that you were.

 

Your problem sounds quite serious and, due to my job, I am in a position to find out a lot of useful information from our financial and legal teams, many of whom deal with the tax office on a regular basis, which is why I asked you to be more specific. So that I could do some research and offer you meaningful advice.

 

Hi Filthy Monkey

 

Thanks for replying again and let me just apologise straight off for the tone of my last post concerning your first reply.

Having just re read my answer to your post I think it may have come across as curt or unappreciative.

I value all input from whomever can help with this problem and I can only assume that my negative post is due in part to my present mindset over the situation.

Let me clarify for you in the hope that you may offer further advice,and I will entirely understand if you wish to offer no more.

 

1-I have not paid ANY tax since 1994 to present day

 

2-My partner claimed as a lone parent from 1995 to 2000.

From 1995-2000 on Income Support then from 2000-present WTC as

she is now employed 16 hours per week.

 

3-I moved out in 1995(hence her first claim) but we reunited in July 2000.

 

4-Due to my previous years Tax issues from 1994-2000 I did not want to inform them of our reunion at this time.

 

5- I never intended it to go on for as long as it has and cant actually believe that I am writing this in 2008!!

 

I agree that i have to pay what is owed,and my partner has informed Working Tax Credit that she no longer wishes to claim any benefits,she just said that her wage was such that she didnt need them anymore.

 

The silly thing is that all this time,since 2000 when i moved back in,I have been registered for Council Tax and on the Electoral Roll,and we have even paid full rent and council tax in all that time,so there is no fraudulent claim in that respect.She also informed Child Allowance that her Lone Parent status had changed as I had moved in.So although legit with the council and Child Benefit Allowance ,the only issue is with her WTC and my Tax & NI .

 

We also realise that we have been extremely "lucky" not to have been found out as we do understand about the data matching capabilities these agencies have.

 

Again,fear was the only reason for my deception but as i get older I realise this has to stop.

 

Thanks for listening

[tiglet]

Fear makes us all do very strange things.

 

It's not the mistake you made, it's how you deal with that mistake that makes you a better person (that's what I always tell my son, anyway).

[Filthy Monkey]

Thanks for clarifying. I'll do some digging and get back to you

[TaxiForHire]

Thanks for clarifying. I'll do some digging and get back to you

 

Thanks so much,I very much appreciate your help with this.

[slick132]

Hi Taxi,

 

From the info you have given, I think you should meet with an accountatnt asap and get this moving. There really is no reason or excuse to delay.

 

I have to say (and I know Tigs will forgive me) I still do NOT think prison is a risk in reality.

 

Take the figures you have to an accountant so they can help you decide when to approach HMRC and how. It may be they think presenting some of the later figures is the way forward, disclosing the earlier ones as they feel appropriate. 1993 is a long way to go back but the accountant must advise you on this.

 

Find an accountant, meet to see if you'll get along and then get this sorted.

[TaxiForHire]

Thanks Slick.

 

Been calling some accountants that offer free initial interview but the problem with getting it sorted thru an accountant is the cost involved.

 

Some are wanting to charge a full fee for each year they go back at roughly between £200-£300, and some want up to £400.00 for this years accounts and £150.00 for every year backdated.

 

As you can imagine,its going to cost over £2000.00 to go that route which is beyond my means.

 

I have asked if credit facilities are available but understandably they are reluctant to offer them.

 

I have also been online to Tax aid, a charity helping with this type of thing and await a response to my request for help.

 

I was toying with the idea of just informing HMRC of my position and hoping for the best,although the threat of prison still weighs on my mind.

 

I await info from Filthy Monkey and will see what they advise.

 

Cheers guys

 

[Goldlady]

Taxi, I would have thought that your accounts would be extremely straightforward and that you could probably put them together yourself (with a little help from your friends:)). In which case all you would need would be someone to liaise with the taxman on your behalf.

[tiglet]

Although no-one can be certain, I would still say prison is very unlikely if you confess.

[slick132]

Goldlady has a good point.

 

I've been self employed for years. I prepare and submit my own a/cs using an Excel spreadsheet.

 

However, given your line of work, it may be simple enough to just prepare income and expenditure schedules. The a/cs do not need to be prepared by an accountant, nor do they have to be audited.

 

It is inevitable that this mess is going to cost you one way or another. There may be some, or all, of the following:-

 

* Accountancy fees

* Income tax and Class IV NIC due on your income

* Class II NIC for at least the last 6 years (earlier years' liabilities may be waived but you'll maybe lose a proportion of your pension rights)

* Penalties based on the tax lost to HMRC

* Interest payable on the Tax lost.

 

Two question -

 

1) Have you been sent any tax returns for completion recently, say, in the last 6 years.

2) Have you (not your partner) had any other income in the last 6 years.

 

PS I believe Tiglet is right in that prison is extremely unlikely in your circumstances if you 'fess up

[TaxiForHire]

Taxi, I would have thought that your accounts would be extremely straightforward and that you could probably put them together yourself (with a little help from your friends:)). In which case all you would need would be someone to liaise with the taxman on your behalf.

Hi Goldlady

I have all years accounts which I did myself from 1993 up to present but only the first years accounts have been verified by an accountant which was in 1994.

Although I have missed tax all these years i have still filled in my books,must be the obsessively neat in me lol.

 

Although no-one can be certain, I would still say prison is very unlikely if you confess.

 

God I hope you are right!

 

Two question -

 

1) Have you been sent any tax returns for completion recently, say, in the last 6 years.

2) Have you (not your partner) had any other income in the last 6 years.

 

PS I believe Tiglet is right in that prison is extremely unlikely in your circumstances if you 'fess up

 

Hi Slick132

My last Tax Return was sent in 1997(see original post) and the only money I have had is earnings and a compensation payout due to traffic accident in 2004.

 

Thanks guys

[Filthy Monkey]

Hi Taxi,

 

I did some asking around on Friday and started to write a reply, but work got in the way. Anyway, here's what I found out, although bear with me as I had nothing to write with, so am doing this from memory.

 

Firstly, prison is always an option for serious tax fraud, but due to the expected sums involved which, judging by your earlier figures are likely to be around £1000 - £1500 / year in tax and NI, it is highly unlikely that this would be considered. HMRC simply don't have the resources to prosecute everyone who is investigated for tax fraud, so in circumstances where the person being investigated agrees to cooperate fully with the investigation they offer a procedure known as the Civil Investigation of Fraud. Under this process, known as the Code of Practice 9, you will be given the chance to fully disclose your tax history in return for a guaranteed civil settlement, thus completely avoiding criminal prosecution.

 

You will be expected to attend an interview at the tax office where you will be given the opportunity to provide what they call a disclosure report. This will detail any irregularities in your tax history and assist you in reaching a settlement with HMRC, which will include interest and penalties. The penalty is likely to be as much as 100% of the unpaid tax. However, this can be reduced as much as 40% by fully cooperating with the investigation and by up to another 30% for volountarily disclosure, where there was no threat of an investigation.

 

It is still very advisable to retain the services of a professional to help with this, but the process is relatively straight forward and should be a lot less painful than the many thoughts that have no doubt been going through your head recently. I'll see if I can find out any more when I'm back in the office, but this should hopefully give you something to think about.

 

Cheers,

 

FM

[TaxiForHire]

Hi Taxi,

 

I did some asking around on Friday and started to write a reply, but work got in the way. Anyway, here's what I found out, although bear with me as I had nothing to write with, so am doing this from memory.FM

 

Thanks FM,Really appreciate your help:)

 

HMRC simply don't have the resources to prosecute everyone who is investigated for tax fraud, so in circumstances where the person being investigated agrees to cooperate fully with the investigation they offer a procedure known as the Civil Investigation of Fraud. Under this process, known as the Code of Practice 9, you will be given the chance to fully disclose your tax history in return for a guaranteed civil settlement, thus completely avoiding criminal prosecution.

 

Sounds like the option I would prefer;)

 

You will be expected to attend an interview at the tax office where you will be given the opportunity to provide what they call a disclosure report. This will detail any irregularities in your tax history and assist you in reaching a settlement with HMRC, which will include interest and penalties. The penalty is likely to be as much as 100% of the unpaid tax. However, this can be reduced as much as 40% by fully cooperating with the investigation and by up to another 30% for volountarily disclosure, where there was no threat of an investigation.

 

This ties in with info i got from the Tax Aid website,obviously paying back upto 30% only of my liabilities as a penalty would be a great help and a huge relief.:o

 

I'll see if I can find out any more when I'm back in the office, but this should hopefully give you something to think about.

 

Thanks a lot FM, you`ve given me some great info.

 

 

Cheers Everyone

[Filthy Monkey]

This ties in with info i got from the Tax Aid website,obviously paying back upto 30% only of my liabilities as a penalty would be a great help and a huge relief.:o

 

Definitely better than going to jail

 

Good luck sorting it all out. Let us know how you get on...

[TaxiForHire]

Thanks FM

 

I will certainly keep you all appraised,its like a soap opera isnt it!!

 

[tiglet]

Let's hope it's one with a really happy ending for you

 

Chin up and well done for beig brave enough to sort this out - let us know how you get on and remember we're here for moral support as well as other advice.

 

Tigs xxx