Large sum of tax to pay

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mahdi87
mahdi87 Registered Posts: 121 Dedicated contributor 🦉
Hi guys,

I got potential new client which he is starting his new sole trader business as plumber but there is a problem back from 1998 - 2004 ( ceased trading Jan 2004) he used to be sole trader in a stall at market and he was vat registed and everything his old accountant use to prepare his VAT but he showed me a statement of his old self-employments 9k+ tax due!! which he said impossible for me to havn't paid that much! he also kept on receiving £100 penalty over the years (7) & interest.

he showed me a letter he received from HMRC after he sent them 1 saying he ceased trading in Jan 2004 which says we havnt received your 2003/04 tax retrun!!!! and all the years after!!!!! my problem is how would i know if 2002/03 were done and previous ones?? can write letter to HMRC asking for records? or do a SAR? never been across such a mess like this likely he had backup of all the work was done by his old accountant and lucky me they were VT backup same software i use!!

please guys give a tip where to start with this mess.

Comments

  • burg
    burg Registered, Moderator Posts: 1,441 mod
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    Not going to be the greatest of help but I have learned from trying to help people in these situations. Although not always the case I have found that 99% of the time they are in this mess for a reason. That reason is usually they either don't take it seriously enough, bury their head in the sand, would rather blame others and although some start off getting things sorted it quickly goes quiet.

    Start by trying to compile together what has or has not been done and/or paid and work from there. I would suggest payments up front before filing each yea and do not start another year until the last one is sorted.
    Regards,

    Burg
  • mahdi87
    mahdi87 Registered Posts: 121 Dedicated contributor 🦉
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    the problem is can i request a statement from HMRC since he started his sole trader business? how would i know if the old accountant done his job (send previous years tax return?)

    thanks Ian dont worry I have drafted an Engagement letter and I agreed with him that we do year by year and a payement for each return done before next one starts.
  • burg
    burg Registered, Moderator Posts: 1,441 mod
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    I would simply get a 64-8 in place and then get on the phone to HMRC and explain he has now appointed you and you want to establish what they believe they are missing and what tax for each years and whether that is an estimate on there part. If you have them added to your HMRC account then you can view back many years on the clients record. I have several clients where I can view statements of account back to the 90's. Once you know what is missing you can then agree a rough timeline and keep them informed.
    Regards,

    Burg
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    Follow Burg's advice. Every word.

    Good luck.
  • mahdi87
    mahdi87 Registered Posts: 121 Dedicated contributor 🦉
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    I just got an email from him with some statements of accounts and would you believe it all the 9k is made up of penalties and interest being added up over the years!! 2001/02 tex return was submited..
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    mahdi87 wrote: »
    I just got an email from him with some statements of accounts and would you believe it all the 9k is made up of penalties and interest being added up over the years!! 2001/02 tex return was submited..

    Owch!!
  • mahdi87
    mahdi87 Registered Posts: 121 Dedicated contributor 🦉
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    any ideas how to resolve this matter?? he sent quiet few statements and they all fines!!!!! can i remove this fines or he has to pay them?...
  • burg
    burg Registered, Moderator Posts: 1,441 mod
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    Depends on what the fines etc relate to. Start by having a look through. I would imagine some are assessments of tax and surcharges based on those assessments. If the tax owed is nil then these will be reduced. You can then review from there.
    Regards,

    Burg
  • Guest
    Guest Registered Posts: 73 Regular contributor ⭐
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    The early returns are outside of the allowed time for filing therefore any estimated tax, surcharge, interest will stand.
    If you consider that the liabilities do not reflect a true amount may wish to look at appealing to the inspector to take an equitable liability view on these years. Would need to bring up to date the latter years, make sure you don’t let the last accepted return year pass next January though.
  • mahdi87
    mahdi87 Registered Posts: 121 Dedicated contributor 🦉
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    ok from my understanding he has from 2003/04 tax return outstanding but since he ceased trading he was an employee and they were still adding pens and interest up to date (04/05, 05/06, 06/07, 07/08, 08/09, 09/10)
  • AK002
    AK002 Registered Posts: 2,492 Beyond epic contributor 🧙‍♂️
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    If he had told them he ceased trading they should reduce all penalties and fines for returns not submitted since ceasing to nil.
  • mahdi87
    mahdi87 Registered Posts: 121 Dedicated contributor 🦉
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    well guys can i send his tax return for 04/05, 05/06, 06/07, 07/08, 08/09, 09/10 as nil for self employments and just include his P60 figures for them years? and deal with previous 02/03/03/04 later???
  • mahdi87
    mahdi87 Registered Posts: 121 Dedicated contributor 🦉
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    updates on this matter.

    today I met this client he brought me some of his records which he was keeping in his home, he also gave me his online logins into HMRC and i managed to check status and guess what guys????? 2000/01, 2001/02, 2002/03, 2003/04 tax returns are outstanding cannot believe it all that 9k was made up of estimated tax, penalties and interest !!! i quiet impressed by the client cos he managed to get me books and records from back then BUT Now my problem is i cannot submit his tax returns online for the above mentioned years nor get the paper form!! guys any ideas how i am going to submit them.. pleaaaaaaaaaaase help me.

    thank you
  • Anne Boleyn
    Anne Boleyn Registered Posts: 196 Dedicated contributor 🦉
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    Old returns

    Hi

    What I would do is to ring HMRC and explain the situation, tell them you have the figures ready to submit but that you lack the necessary forms, would they accept it in letter format or could they send out duplicate returns to you. I was in a similar situation once but put everything into a long letter at their request.

    Hope this helps.
  • Guest
    Guest Registered Posts: 73 Regular contributor ⭐
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    HMRC will not process the time barred returns - they simply can’t. I would suggest you still prepare and send in. You will then receive a letter saying thank you for the returns but unfortunately due to being late cannot be processed and the tax estimates will stand. At that point you could request that the liabilities are amended under an equitable liability basis and suggest to them that the equitable liability is arrived at using the figures prepared on the late returns. You will be in the hands of the inspector dealing with this but will be able to appeal if they don’t agree. This is an amendment to the tax liability and NOT the returns.
  • mahdi87
    mahdi87 Registered Posts: 121 Dedicated contributor 🦉
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    Hi there,

    Thanks for replies guys I have contacted HMRC by letter and they got back to me saying that them years are out of date!!! Should i still complete the accounts and sent PL & BS in?? Or just the profits for each year and ask them to re-calculate the tax liability? It’s tricky situation I am in now with this new client!!

    Please let me know.
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