My husband was self employed up to 2006 and then changed to a limited company.

From 2006-09, he was employed by his company (not self employed) which paid his taxes.

The company then became insolvent. HMRC are saying he owes £10k tax. Any advice?

My husband was self employed up to 2006 and then changed to a limited company. From 2006-09, he was employed by his company (not self employed) which paid his taxes. The company then became insolvent. HMRC are saying he owes £10000 tax. Any advice?

Advice : give more detail.

What tax year(s) are they claiming this arises from?

Is it all tax owed or tax & penalties?

Do you dispute the tax is owed? If not:

Does it arise from his employment (did the company underpay his PAYE)?

From his self-employment?

I'm not confident anyone can give you reliable advice without more details.

Why do you feel it is "harassment" by HMRC?

Advice : give more detail.

 

What tax year(s) are they claiming this arises from?

Is it all tax owed or tax & penalties?

 

Do you dispute the tax is owed? If not:

 

Does it arise from his employment (did the company underpay his PAYE)?

From his self-employment?

 

I'm not confident anyone can give you reliable advice without more details.

 

Why do you feel it is "harassment" by HMRC?

It's from the tax years 2006 to present. He was employed by his company until 2009, of which, all payments were made and the accounts show this. HMRC are saying he was self employed by his company, he was not. He hasn't been self employed since he started working as a limited company and all the documentation was transferred accordingly. The company was made insolvent in 2009 and every other month, he gets a letter stating he owes the self employed tax and he calls them to dispute it every time he does. They say that they've sorted it out, then a couple of months down the line, he gets another letter saying he owes more. Now they say they're taking him to court even though he's already proved that he's not liable for r it as it's been paid.

It's from the tax years 2006 to present. He was employed by his company until 2009, of which, all payments were made and the accounts show this. HMRC are saying he was self employed by his company, he was not. He hasn't been self employed since he started working as a limited company and all the documentation was transferred accordingly. The company was made insolvent in 2009 and every other month, he gets a letter stating he owes the self employed tax and he calls them to dispute it every time he does. They say that they've sorted it out, then a couple of months down the line, he gets another letter saying he owes more. Now they say they're taking him to court even though he's already proved that he's not liable for r it as it's been paid.

"It's from the tax years 2006 to present. He was employed by his company until 2009, of which, all payments were made and the accounts show this"

You may be out of time for any appeal relating to a 2006 tax year. (When you say 2006 do you mean 2005/6 or 2006/7?)

If "all payments were made" is it that HMRC are wrongly claiming he owes for pre 2009, and if so why, if he was on PAYE?

Unless something has gone wrong I can't see how you are saying both that all payments were made and he was on PAYE ..... You may need to detail what tax HMRC claim is owed for which tax year(s) (and penalties / interest)

"He hasn't been self employed since he started working as a limited company " ..... Is correct, as you can be self-employed, but not by a limited company.

If it was "his own" limited company then the company may have paid him salary (liable to PAYE if above the income tax threshold) or dividend (which is taxable but still not "self-employment"), even if it is "your own" limited company with all the shares held by you.

Self-employed is literally employed by yourself, not by a limited company (as this isn't "self" as it is a seperate legal entity)

If the company was made insolvent in 2009, and you note he has not had self employment between them (when the company was made insolvent) and now - has he been on PAYE?

Again, knowing what figures HMRC are claiming for which years might help disentangle this.

It's 2006/07 they're claiming. He was PAYE by his own limited company . The HMRC are insisting he was self employed. He has proved that he wasn't. Since 2009 when the company became insolvent, he has been employed by a few companies and never worked for himself and has paid tax (PAYE) which is on his wage slips. They are saying he hasn't put in his self assessment returns, but he didn't need to do this as he was PAYE.

It's 2006/07 they're claiming. He was PAYE by his own limited company . The HMRC are insisting he was self employed. He has proved that he wasn't. Since 2009 when the company became insolvent, he has been employed by a few companies and never worked for himself and has paid tax (PAYE) which is on his wage slips. They are saying he hasn't put in his self assessment returns, but he didn't need to do this as he was PAYE.

He has to put in self-assesment returns if they ask for them, even if the return shows only that he paid all the tax due by PAYE, and that he had no other income.

Once he has put in a return and it has been accepted it would be for HMRC to show he had other income (eg from looking at bank statements, which they can require.

He can't say "I was PAYE only, I'm not putting in a return", he has to say "I was PAYE only, but since you have asked for a return, here is my return where the figures stated relate to PAYE only"

Has he been asked to provide a self-assesment return?

If so, for which years, and has he given them the return (and when)?

I'm wondering if he has been asked to do so, hasnt done so, and HMRC has made a "determination"?

Has this featured in the correspondence or their statements?

Again, if so, and it relates to 2006/7, he may now be out of time to get a 'determination' for 2006/7 overturned, as any determination not appealed can become "fact" even if based on their "guesstimate" - which can happen when returns aren't submitted ......

Bizarrely, even once a determination has become fixed, there is still a legal requirement to provide a return. This can lead to the odd situation where a return is provided (very late) but the determination still stands : it is up to HMRC and the appeals timescales for if the determination gets amended.

From memory a determination should be appealed within six months, and may be amended after 6 months but it isn't mandatory, but it would be very unusual to have a determination varied once 6 or 7 years has elapsed from when the return was due.

I've posted on this before : http://www.consumeractiongroup.co.uk/forum/showthread.php?403373-DLC-and-HMRC&p=4344824#post4344824

http://www.consumeractiongroup.co.uk/forum/showthread.php?439391-HELP!-Tax-bill-from-90-s-when-I-was-unemployed&p=4674730#post4674730

so, this isn't an uncommon scenario..... Has your husband had a "determination" made?

When he changed to being employed by his limited company, he was never sent any self assessment forms as they were aware he was PAYE. He has documentation with both his accountant and the insolvency service to prove this. He has had a determination made on 05/04/2008 for £600 and another on the 05/04/2009 for £3000. The rest is all 'charges' and when he phoned yesterday, they still insist he was self employed, even when he's proven that he wasnt.

When he changed to being employed by his limited company, he was never sent any self assessment forms as they were aware he was PAYE. He has documentation with both his accountant and the insolvency service to prove this. He has had a determination made on 05/04/2008 for £600 and another on the 05/04/2009 for £3000. The rest is all 'charges' and when he phoned yesterday, they still insist he was self employed, even when he's proven that he wasnt.

So, although I couldn't be sure this related to one or more determinations, I wasn't wrong with my suggestion.

It would have been helpful if you had provided this info earlier as part of "more details", rather than me having to ask you if it was and you confirming it .... It has felt a bit like "pulling teeth", and I've had to ask for more details 3 times to get the info ....

So, as a final contribution (to establish information that may help others take over helping) :

1) did he formally appeal

a) the 2008 determination?

b) the 2009 determination?

c) both??

2) by "charges" are they on the HMRC statements as

a) charges

b) penalties, or

c) interest?

A breakdown of the years and composition might help.

I wasn't at home so didn't have the exact details to hand, I apologise. He appealed over the phone about all contributions where they agreed with him about the details every time except for this time. The breakdown consists of all three items you have listed. I have just noticed 2010 is included also.

The list is 05/04/08 SA Determination, Tax £600, Interest to 20/01/15 £106.31

05/04/08 SA 1st Penalty for Late Return, Tax £100, Interest to 20/01/15 £17.21

05/04/08 SA 2nd Penalty for Late Return, Tax £100, Interest to 20/01/15 £16.06

05/04/09 SA First Payment on account, Tax £300, Interest to 20/01/15 £53.14

05/04/09 SA Second Payment on account, Tax £300, Interest to 20/01/15 £49

05/04/09 SA Determination, Tax £3000, Interest to 20/01/15 £447.28

05/04/09 SA 1st Penalty for Late Return, Tax £100, Interest to 20/01/15 £14.48

05/04/09 SA 2nd Penalty for Late Return, Tax £100, Interest to 20/01/15 £13.10

05/04/09 SA 1st Late Payment Surcharge, Tax £180, Interest to 20/01/15 £22.26

05/04/09 SA 2nd Late Payment Surcharge, Tax £180, Interest to 20/01/15 £22.26

05/04/10 SA First Payment on Account, Tax £1800, Interest to 20/01/15 £268.37

05/04/10 SA Second Payment on Account, Tax £1800, Interest to 20/01/15 £241.59

05/04/10 SA 1st Penalty for Late Return, Tax £100, Interest to 20/01/15 £11.49

05/04/10 SA 2nd Penalty for Late Return, Tax £100, Interest to 20/01/15 £10.11

Total unpaid amount £10052.66

I'm not sure what other information I can give to you.

I wasn't at home so didn't have the exact details to hand, I apologise. He appealed over the phone about all contributions where they agreed with him about the details every time except for this time. The breakdown consists of all three items you have listed. I have just noticed 2010 is included also.

The list is 05/04/08 SA Determination, Tax £600, Interest to 20/01/15 £106.31

05/04/08 SA 1st Penalty for Late Return, Tax £100, Interest to 20/01/15 £17.21

05/04/08 SA 2nd Penalty for Late Return, Tax £100, Interest to 20/01/15 £16.06

05/04/09 SA First Payment on account, Tax £300, Interest to 20/01/15 £53.14

05/04/09 SA Second Payment on account, Tax £300, Interest to 20/01/15 £49

05/04/09 SA Determination, Tax £3000, Interest to 20/01/15 £447.28

05/04/09 SA 1st Penalty for Late Return, Tax £100, Interest to 20/01/15 £14.48

05/04/09 SA 2nd Penalty for Late Return, Tax £100, Interest to 20/01/15 £13.10

05/04/09 SA 1st Late Payment Surcharge, Tax £180, Interest to 20/01/15 £22.26

05/04/09 SA 2nd Late Payment Surcharge, Tax £180, Interest to 20/01/15 £22.26

05/04/10 SA First Payment on Account, Tax £1800, Interest to 20/01/15 £268.37

05/04/10 SA Second Payment on Account, Tax £1800, Interest to 20/01/15 £241.59

05/04/10 SA 1st Penalty for Late Return, Tax £100, Interest to 20/01/15 £11.49

05/04/10 SA 2nd Penalty for Late Return, Tax £100, Interest to 20/01/15 £10.11

 

Total unpaid amount £10052.66

 

I'm not sure what other information I can give to you.

"Penalty for late return" three times seems fairly conclusive that HMRC are expecting at least 3 returns.

Perhaps this is "new news" to you, ....... But it is clear HMRC believe they've asked for them, and even if you weren't aware before, you are now.

Are you saying that in all the previous calls HMRC said "No, it's OK, we aren't asking for a SA return, you are right, you don't have to send them"? Or never mentioned an outstanding return?

As for "I'm not sure what other information I can give to you" :

Has he been asked to provide a self-assesment return?

If so, for which years, and has he given them the return (and when)?

We've established HMRC want returns for at least 3 years.

For each of those tax years (3 or more) :

"has he given them the return (and when)?"

That information might help you to obtain a reliable answer, if other respondents feel inclined to step in.

He was never asked for a self assessment return, even after every phone call he's made subsequently. Once he'd explained that the relevant documents had been filed to say that he was no longer self employed, they were fine with that. Then he'd receive a new letter, phone again, explain again and be given the excuse that one department doesn't know what the other is doing, but that he was indeed correct in what he was telling them. He was told a couple of phone calls ago that he didn't need to do any returns because they can see by his records that he's been paying PAYE tax. It's just this time they've decided that he was self employed and they've still not asked for a return...

Thank you for your advice

He was never asked for a self assessment return, even after every phone call he's made subsequently. Once he'd explained that the relevant documents had been filed to say that he was no longer self employed, they were fine with that. Then he'd receive a new letter, phone again, explain again and be given the excuse that one department doesn't know what the other is doing, outbreaks indeed correct in what he was telling them. It's just this time they've decided that he was self employed and still not asked for a return...

 

Thank you for your advice

If they've sent "penalty for late return" : it strongly suggests they've asked for one (and even if you didn't know before, you do now).

If you believe they've asked for one you are obliged to provide one : I believe this would be their expectation unless / until you got written confirmation they no longer required one.

If you get any returns in (unless they have confirmed in writing they are "not required"), they MIGHT recalculate, and (back of napkin calculation) reduce the total to around £2400 IF they reconsider the 2009 determination and your husband owes no tax for 2007/8 and 2008/9

You could ask if they might reconsider any determinations?

I think they are unlikely to reconsider the 2008 determination (as it relates to tax year 2006/7), but again you could ask : I'd be delighted to be wrong.

The 3k bill (and its associated interest) are the largest component of the total bill, and (if not already "fixed in place") may become so, so I'd suggest getting that return in quickly if it is still required, then any others where they might re-asses a determination, then (lastly) any where the determination won't be adjusted (as a return may still be required even once the determination is fixed in place)

Okay, thanks for your help and hopefully we'll get to the bottom of this. Much appreciated:)

Update to advice, having checked if things have changed since I helped a friend who had similar, where we managed to get determinations re-assessed years after.

You may need the help of a specialist tax adviser.

There used to be a principle of "Equitable Liability", but they have replaced this with "Special Relief" as well as making time limits clearer.

Time limits : the later of

a) 3 years from filing date of the return OR

b) 1 year from the determination

http://www.hmrc.gov.uk/manuals/chmanual/CH56100.htm

So, these have passed and the determinations may now be fixed.

If they say "determinations fixed, not changing them" then your only hope may become "special Relief", on the basis of the calls where they told you they accepted he had worked PAYE only and didn't mention requiring a return.

Special Relief is complex, (and I'm no expert), hence you may need specialist advice

Some relevant pages:

http://www.hmrc.gov.uk/manuals/sacmanual/SACM12230.htm

http://www.hmrc.gov.uk/manuals/sacmanual/sacm12215.htm

http://www.hmrc.gov.uk/manuals/sacmanual/SACM12220.htm

You'll note that one of the requirements before HMRC can consider Special Relief is that all the tax affairs MUST be up to date.

So I'd have to advise:

1) Enlist the help of an accountant / advisor who can help you claim Special Relief, but at the same time

2) get ALL returns in, or you'll definitely be dead in the water and bound to pay.

I've just read through this thread. It's taken a little while to conclude, but yes, seek out an accountant to get you through this. They're dealing with these situations daily and you have kept records which will hasten the solution. I hope this then gets resolved quickly for you.