Advice Required on non payment of taxes

**NotAllThere** · 2 September 2011, 10:10

Get an accountant, quick, so they can start negotiating with HMRC to work out a payment plan. Given you've been given time to pay once already, there is a possibility they'll come after you personally, and even make you bankrupt - but they'd probably rather have the money.

If you do get a plan and run out of work, you've got to talk to them immediately.

**malvolio** · 2 September 2011, 10:12

Originally posted by Tristesse View Post

Hi All,

This is my first post on the forums which I've been looking through for a while and I wondered if anyone could possibly offer some advice.

Background first:

I've consulting for about 4 years through my limited company with very little breaks in work (thankfully), without going into too many details I'm the only person working in our household during this time (wife is a stay at home mum).

Within the last two years our costs have gone up without too much movement in my day rate and frankly we've been over spending. This has left a big gap in the company finances as I've been drawing far too much money from it (illegal dividends etc). It's got to the point now where I have no realistic chance of paying of the debt I owe to the IR (around £30,000).

Part of the monies have been overdue for sometime (over a year) with the rest and more becoming due soon.

If possible please could I get advice on some things:

I need to keep earning, are HMRC likely to just freeze my accounts? Should I move to another ltd company or perhaps an umbrella to make sure I can still receive an income?

Should I try and somehow try and get another time to pay plan in place (not sure if this will work the last one didn't as I lost work for about 2 months).

Could I be prosecuted? Appreciate the HMRC could probably transfer the debt to me personnaly, would I be able to pay this back over time or would I have to / be made to declare bankrupt?

Any advice I could get would be most helpful as I've sort of burried my head in the sand for a while and now I realise how stupid i / things have got.

Best Regards
Tristesse

With that history, I would suggest you ain't going to get any meaningful advice from a bunch of amateurs on an internet forum. Changing you payment vehicle won't help, you need to sort the existing mess.

Go get a good accountant and get their professional advice. Best case, you (and they) work out an arrangement with the Revenue to get you back on track. Worst case, you are declared bankrupt. Really worst case, you go to prison for evasion.

Does that help focus the mind?

**DonkeyRhubarb** · 2 September 2011, 10:19

Would he be best off just going to a regular Accountant or someone who specialises in negotiating with HMRC?

I have put a few people on to Tax Avoidance, Tax Fraud, Tax Evasion - HMRC Tax Investigation Expert. They ain't cheap but I've heard they get results.

**Greg@CapitalCity** · 2 September 2011, 10:19

Firstly I would suggest you get your head out of the sand and speak with an insolvency practitioner. A formal liquidation may be your best route, and they will be able to put themselves between the HMRC and you.

Try Insolvency Practitioners - Lines Henry - these guys have an area of their business who specialise in contractor company liquidations.

**craig1** · 2 September 2011, 10:26

You're in trouble but it is often fixable if you work through a professional. HMRC's debt collectors will just try to bully you if you do it yourself, an accountant with company distress experience will know how to work with them to get you a plan.

You'll probably have to agree to pay a substantial part of your company's net income but as long as you're honest about it you'll just have to live through a lean period while it's paid back.

If you're a contractor on a rate that isn't embarrassingly low then you should be in a position to put away a good lump of your income, never mind having to over-dividend to cover a spending lifecycle. Can I suggest you visit CCCS (or similar), they're free and can help you.

**Tristesse** · 2 September 2011, 10:47

Many thanks for all of the replies. You're quite right it is time to get this sorted.

Just some further questions if I may.

HMRC have not contacted me in any way so far, should I wait for them to and try in the meanwhile I come up with an offer or should I be looking to an accountant to contact them now and get things in motion?

I've looked at the figures and whilst keeping money for current liabilities etc to pay the old ones off I would probably only be looking at £500-750 per month (at best case without interest that's almost 4 years), do HMRC give time to pay orders this long?

If I go for the liquidation route how difficult is this? I am not trying to avoid paying the debt as I realise that it will be transferred to me but would it make it easier to set up a payment plan this way?

Thanks again for the advice.

Best Regards

**Jeremiah@RHJAccountants** · 2 September 2011, 10:55

Originally posted by Tristesse View Post

Many thanks for all of the replies. You're quite right it is time to get this sorted.

Just some further questions if I may.

HMRC have not contacted me in any way so far, should I wait for them to and try in the meanwhile I come up with an offer or should I be looking to an accountant to contact them now and get things in motion?

I've looked at the figures and whilst keeping money for current liabilities etc to pay the old ones off I would probably only be looking at £500-750 per month (at best case without interest that's almost 4 years), do HMRC give time to pay orders this long?

If I go for the liquidation route how difficult is this? I am not trying to avoid paying the debt as I realise that it will be transferred to me but would it make it easier to set up a payment plan this way?

Thanks again for the advice.

Best Regards

Well you have done the right thing in starting to act now even if it is quite late!

I would spaek to an accountant or insolvency practitioner.

As you will need professional and specialist advice to help you liase with HMRC.

This can be sorted but i would act as fast as you can as the more your head is buried in the sand the worse it will get!

**Greg@CapitalCity** · 2 September 2011, 11:02

Originally posted by Tristesse View Post

If I go for the liquidation route how difficult is this? I am not trying to avoid paying the debt as I realise that it will be transferred to me but would it make it easier to set up a payment plan this way?

I believe its straightforward for you - the insolvency practitioner does all the work. From what I understand payment plans of 2-4 years are routinely negotiated by them, and exceptionally can extend to 5 years. Give them a call - they will give you as much free advice as you like over the phone.

**Tristesse** · 2 September 2011, 12:01

Many thanks I shall give them a call.

In the interim is it worth me getting to grips with other payment vehicles etc. For example given how my financial affairs have been running to ensure tax etc are paid going forward should I look to an umbrella?

All being well I'll be able to come up with some form of agreement with HMRC but if not I can't put my family at risk by not having any cash at al.

Best Regards

Advice Required on non payment of taxes