Screwed up - and I'm very worried

[Kukri Spain]

OK. I know I've gone about this all wrong and I've been stupid. But I'm now in a horrible place and I'm worried sick.

 

I had a small limited company (two directors) which hit the wall in the summer of 2011. I and the other director parted company (amicably in the circumstances) but we literally closed the office door and just walked away. Previously we had traded successfully for four years and we had paid all our bills. We had lost all our major contracts over a two-month period and the business was stuffed. We walked off owing one quarter's VAT and about six month's worth of Corporation Tax. We have ignored any correspondence about the failed business. We haven't been chased too hard by any tax authority. We had no other creditors outstanding.

 

It gets worse, much worse. I started to work for myself on 1 September 2011. I have not registered as self-employed. I just set up a one-man marketing and PR consultancy and started to work. I have not filled in a tax return for over two years and have ignored all warnings from HMRC re tax returns. Needless to say I have not paid any tax or NI since September 2011.

 

I have copies of all invoices that I have raised since September 2011 and, with a bit of work, I can put together a record of business expenses against that income. Recently my finances have begun to pick up. I have put enough money on one side to cover the tax and NI that I think I owe since September 2011 but I am absolutely terrified about any penalties that I will have incurred regarding not registering as self-employed since September 2011 and my failure to submit tax returns. I can't sleep because of this.

 

I want to put my affairs right with HMRC and NI. I never intended not to pay tax. But I am absolutely terrified about the penalties that may be coming my way. What do I do? I know I've been bloody stupid but here I am.

 

Please help me.

[honeybee13]

Hello and welcome to CAG.

 

I'm sure you will be able to get through this and feel better afterwards. I'll ask one of the site team to look at your thread and see if he can help.

 

My best, HB

[Kukri Spain]

Thanks HB. I don't know which way to turn. I don't know who to contact first and how to present my situation to them.

 

It's never been a case of wanting to evade tax or NI. I have always intended to pay what I owe from 2011. I hope somebody can advise me.

[honeybee13]

I'm sure advice will be along, please bear with us.

 

I would hope that if you're contacting HMRC of your own volition now, it would count in your favour.

 

HB

[BazzaS]

You've taken the first step by posting here.

 

HMRC can be 'bloody awkward', and you are likely in line for penalties / fines, BUT : you are way better to be approaching them saying "I've been daft, but am keen to get this sorted" than waiting for them to come after you : if they know you no longer "have your head in the sand" they are less likely to be awkward!.

Any penalties you owe won't reduce by you leaving it, and can only increase (as they add interest, or a daily amount, or "make a determination"

 

There was always a penalty for late filing, but this had increased on a sliding scale since the 2010/11 tax year (filing due by Jan 2012).

 

Edited: if you started work for yourself in Sept 2011, then the filing for that is for tax year 11/12, which was due by Jan 13. So, is it that year that is overdue, or do you have a return due for 10/11 too (due Jan 12)

 

So, bite the bullet and contact them : I suspect this is the answer you were expecting?. If the worry is stopping you sleeping, some if that worry will be "fear of the unknown"?

 

Will you begin to feel better if you know you are dealing with it and gave some idea of what you'll face?

I'm not saying it'll be easy, but you'll know what you face rather than always worrying if "the letter" will land on your doormat, or if one of their field team turns up at your door.

Edited May 28, 2013 by BazzaS

[Kukri Spain]

Thanks BazzaS. I think I expected what you have said so I had better get off my backside and contact them today. What about registering myself as self-employed? What's the situation there for me? I presume that that is a separate contact - and additional penalties. Am I right? If so, who do I contact there?

 

Thanks again.

[Kukri Spain]

OK, I've now bitten the bullet.

 

1. I have sorted out my NI fairly painlessly.
   
2. I have spoken to self assessment HMRC re sum owing prior to my company failure. (It's a lot!) Made a part payment and they are writing to me regarding balance.
   
3. I have an face-to-face appointment with HMRC locally on 11 June to discuss tax, penalties and fines from September 2011 to date. They have told me that I can file outstanding returns on that date.
   

I'm still very worried, of course. If I do not have enough funds set aside to pay outstanding tax and penalties then what sort of deal (if any) will they cut me? If I have to pay over a period of time I will need to spread it out over as long a period as possible. I'm not earning a lot of money.

Thanks for all advice.

[slick132]

Hi Kukri Spain,

 

I was about to reply but saw you have posted again.

 

I would see an accountant or tax advisor before going to any interview locally.

 

Failed Ltd Co - Were you paid under PAYE and did an accountant or tax advisor deal with the PAYE before the company went down.

 

Did you just discuss Corporation Tax with HMRC, before making a pay't on a/c.

 

Subsequent Self Employment - You would be best speaking to an accountant to sort out :-

 

1. If you are under the VAT threshold as this could be more serious if you've failed to comply with VAT Reg'ns.

 

2. Your S/E year end accounts date for they first period and subsequent annual a/c's.

 

3. If you or the acc't will prepare and submit accounts and/or tax returns.

 

4. If there is likely to be any penalty for late notification of S/E or late filing of tax returns.

 

Once you address these issue, you are likely to have far less to worry about than you think.

 

[honeybee13]

Hello again Kukri.

 

This isn't meant to sound patronising, I just wanted to say I'm proud of the way you handled this yesterday. I hope you'll come back here for further opinions and also let us know how you get on.

 

We like to know what the outcome is for people we advise and you will help future caggers as well.

 

HB