Possibly a serious tax issue that I'm worried about. Advice greatly appreciated

[Out_of_work]

A recent phone conversation with a friend about a few personal problems put some worrying things in my mind, that have been going round in my head at what is already a very stressful time for me.

 

He was mentioning that when he was young, he'd done a job for somebody and he'd been paid by cheque, and found out years later that he was suposed to declare the tax himself (as it technically classified as self-employed). After 9 years the tax office found out and called him for an interview under caution and asked him about it all and fined him a massive amount with penalties, what he ended up paying them far outweighed what he earned.

 

I did some work for a company back in 2007, and was paid by cheque for £3886.95. I've just been through everything, and found a record of it in my bank details. I thought at the time that they dealt with my tax, but trying to think about it all in hindsight, I dont recall doing one of those forms where you put in your NI details or whatever when I worked for them. I've got a a horrible feeling that I've screwed up badly, and I was supposed to do my tax myself.

 

I'd like to put it right, or at least contact the HMRC to check about it, but I am rather scared. I don't want to be labelled as a tax fraud if it turns out that I was suppoed to declare it. But I'm also worried about how much I might have to pay by the way of fine/inflation charges too. is there anyway of finding out in advance? Any way to calculate it all? Money is not a great thing for me at the moment.

How will the tax people treat me if I contact them after so long about this?

 

Thank you.

[Nystagmite]

Was that the only job you did in 2007? The tax allowance for 2007-2008 was £5225.

[Out_of_work]

Thanks, I was just going to respond based on something found there.

I wasn't working much at the time. just some part-time work and mainly regretably being on the dole. It was one of my many rough years, other than this. I'm trying to find some information on how much income I had that year. Would that be p45's if I still have them?

 

Also, i was reading abut fine and interest by percentages. is this percentage on earnings, or on the tax I'd pay? There's no way to calculate the payment at this point if it's based on tax.

 

I'd estimate I'd have about £7000 total oming in that year from the above job, JSA and PT work.

[Nystagmite]

Your earnings would be on any P45s and your P60.

 

If your JSA is income based, then I believe it's not taxable.

[Out_of_work]

just had a look through my statements for that period Jan-Dec 2007. I know its not the tax year, but I underestimaed above. Forgot I had a couple of other short jobs, which were definately PAYE. Adding them alltogther with the occasional JSA comes to £8057, so that's £11943 approx with what might possibly be undeclared.

 

is it possible to speak to HMRC and ask them if my tax was done for the work I'm not sure about? Would they have specific records from then?

 

The JSA was income based, yes. I think they kept sending me letters though, every time i signed off, telling me that it counted as taxable income.

[Out_of_work]

on the website taxaid, it says at the bottom of one of the pages that the :

 

How many years will HM Revenue and Customs go back?

 

From April 2010, the time limits are:

• 4 years in all circumstances where the taxpayer has taken reasonable care to submit a correct return
  
• 6 years in all circumstances where the taxpayer has failed to take reasonable care
  
• 20 years where the taxpayer has failed to notify liability, or has deliberately understated a tax liability
  

what does this mean? That if they for some random reason decided to investigate me now, theyd only go back 4 years, or if I declare this backdated money, that they'd go back 4 years from then?

Until recently, I never had the needs to do a tax return. Everything was PAYE (well, maybe apart from this), so it was all going on without me. I'm rather confused by all of this.

[Nystagmite]

I think it means:

4 years - person has taken steps to inform HMRC

6 years - hasn't taken care with tax returns; but hasn't purposely done this to evade tax

20 years - purposely evaded tax

 

I think this is something you need to discuss with HMRC.

[Out_of_work]

So based on years passed, it means that that's how they perceive you?

I need to find all the records of what I've done for this company and see if I can add everything together, and see if there's some no expensive Solicitor or CAB advice I can get to go about this properly.

 

Is there an online resource for calculating how much I might have to pay? Doesn't have to be acurate, I just want an estimate to see if I can afford it.

 

update: One thing that has just occured to me, before I go offline for the night. I had a big screw-up with my old PC, had to recover a lot of data from it when i got a new one. It's possible that not all information relating to this work was recovered. So if I declare this, and it later turns out that there was something missing, would they treat it as being dishonest, by me not being able to declare it? I also dont have my old email from this time, due to changing ISP, so I'll have no records of working for this company by this way either.

Looks like this all may well prove to be difficult to sort out

Edited July 10, 2012 by Out_of_work

[Gbarbm]

You can if you wish make a voluntary disclosure to HMRC.

They will calculate the tax and NI due on the income which you will have to repay, interest would also be payable to compensate HMRC for loss if the use of the monies over time.

Generally speaking, as a previous poster has stated, HMRC will apply retrospection for 4 years, the 6 and 20 years usually applies in fraud and evasion cases.

HMRC will consider penalties. A percentage is applied based on wether the disclosure is prompted or unprompted; behaviours are also considered such as deliberate, careless or mistake despite taking reasonable care. HMRC can also suspend the penalty

[Out_of_work]

so they'd back-date for interest for 4 yrs? thats not too bad I suppose. I've been going through all my old files from my old computer and found out all the old documents. they're more spread out than I expected, between 05-07, and across two interlinked companies, just over a thousand £ more than I expected.

I'll have to sort out how to inform the HMRC of them. There's a note on my records saying that some of them were declared to the tax already, but I need to be sure of that. I have no recollection of doing it myself.

[Out_of_work]

(sorry if this comes up twice, i thought I posted it already, but its not showing up)

 

I just found some records of something from 1999 that may be a similar situation when I did a one-off job for an environmental group. Not sure how the pay was dealt with. But how would the HMRC deal with a record so old? Would it still be limited to back-dated the interest to 4 years when I declare it (after I check it's not already paid)?

 

Thanks

[Consumer dude]

Are you worried about assets..

[Out_of_work]

I'm worried about everything at the moment. I'm really not sure if tax was done for this or not. And I am of course worried about being accused of Fraud, an investigation and having my assets seized, or a big fine. Everything is concerning me at the moment. I'm not sure what is the best course of action to go about this.

[Out_of_work]

Sorry to bring this topic up yet again. But i contacted the lady who I was mainly directly working for back in 1999 and asked about how it was done. She didn't remember, as she said things were sometime done PAYE and sometimes as a freelancer basis. She wasnt sure how her own pay was done, it was so long ago. But she said that she herself had no financial records anymore from so long ago, as they can be destoryed after 6 or 10 years.

Does this essentially mean that I'm worrying over nothing, as it's unlikely that there will any records from back then, or is it a different thing? I don't want to get myself into any unnessary trouble if there's no reason too, especially if it turns out that my tax was dealt with. If there are no financial records, then how would I know one way or another?

[Gbarbm]

I don't think fraud is an issue in your case; worst case scenario, you failed to take reasonable care.

My advice would be to get together as much information as you can... Invoices, bank statements etc.

As I say, you will have to pay back the tax and NI and interest; you can request a time to pay arrangement if it would cause you financial hardship to pay the amount in full

[Out_of_work]

I'll sort out about the 05-07 tax soon, i've found out an organised all the existing paperwork, and it's all there in detail, but I'm really unsure about what to do about the 1999 stuff. Is there likely to be records from this somewhere? I dont want to contact HMRC and rock the boat about ths if theres no way it can be proved either way if the tax was paid or not. I might end up paying tax that I've already paid all over again, and getting myself into a lot of trouble for nothing.

I've been reading that companies generally keep tax records 6-10 yrs, is this correct? If this is the case and there's no records from 1999 anymore, all it would do is cause a lot of bother to nobody's benefit if I bought it up with HMRC. I don't want any more trouble than I already have in my life at the moment.

[Gbarbm]

An employer has to keep records for up to six years and HMRC will also keep records for 6 years.

So, neither the employer/HMRC will have any records before 6 April 2006

[Out_of_work]

I don't think fraud is an issue in your case; worst case scenario, you failed to take reasonable care.

My advice would be to get together as much information as you can... Invoices, bank statements etc.

As I say, you will have to pay back the tax and NI and interest; you can request a time to pay arrangement if it would cause you financial hardship to pay the amount in full

 

 

An employer has to keep records for up to six years and HMRC will also keep records for 6 years.

So, neither the employer/HMRC will have any records before 6 April 2006

 

Okay, thanks for those

But my friend said it was 9 years after the job when they cam to him. Was this just bad luck on his part that the employer had perhaps kept things too long?

in this case I'm going to dismiss the 1999 stuff as I'm pretty sure that the tax on that was paid, and rocking the boat wont help, as there wont be any records to say if I already paid it or now. Paying the same tax twice, plus itnerest and a fine doesn't sound good to me, especially if I haven't done anything wrong.

 

the 2005-7 I need to deal with in the very near future though. I think that was probably paid as well, but I'm not so sure about it, or if it all was. I don't have bank statements going back that far. All i have is the invoices. I don't know what else they would want to look at, other than my tax records for those years, which they would have anyway.

 

Would I be right in assuming that how they do this is that they would look at my tax code and what I paid on that particular year, based on PAYE and anything declared. Add this to the years earnings they already have, and re-calculate the tax. From this they would bill me for the difference, plus the interest?

[Gbarbm]

There is no obligation (as far as HMRC are concerned) for an employer to retain records for more than 6 years after the tax year to which they relate.

Essentially, your comment regarding the calculation of additional tax is correct, although if the other income is classed as self employed, then allowable expenses can be offset against the income thereby reducing the amount of tax due

[Out_of_work]

Whats an election? http://www.justanswer.com/uk-tax/31s93-long-dose-hmrc-keep-income-tax-returns.html

 

just going back to this:

 

How many years will HM Revenue and Customs go back?

 

From April 2010, the time limits are:

• 4 years in all circumstances where the taxpayer has taken reasonable care to submit a correct return
  
• 6 years in all circumstances where the taxpayer has failed to take reasonable care
  
• 20 years where the taxpayer has failed to notify liability, or has deliberately understated a tax liability
  

How can they go back 20 years if they only have records for 6 years?

 

Sorry if I'm being a nuisance, but I'm really confused by all of this

[Gbarbm]

The election referred to in the link is in respect of Capital Gains tax( pre March 1988 election concerning valuation of property)

HMRC will only go back beyond 6 years if the year was already under enquiry before it went out of date or if fraud is suspected

[Out_of_work]

so they must keep some kind of recrods before 6yrs old somewhere then?

[Gbarbm]

so they must keep some kind of recrods before 6yrs old somewhere then?

 

They would just try and reconstruct the details based on information supplied by you.

HMRC computer records drop off the system after 6 years and if there is a case file, this is weeded every few years