Hi Guys
A year ago a new Client walks in with a HMRC Statement for over £150k owing. Some simple enquiries led to the discovery that he had not submitted a tax return since SA began!
Some swift work filing returns "in date" led to some ridiculous determinations being cancelled and left us with a balance of about £17k. This is made up of tax and penalties from 1997 to 2006 in 4 catagories: -
1. Determination for 1997/8
2. Some Payments on Account
3. Late filing Penalties
4. 6 lots of £420 Commisioner's Penalties!
Add interest to each entry and you can see how we are at £17k. The Client is a Sub Contractor, has all his deduction records, receipts and bank statements going back to 1997 and his theoretical tax position would be a £3950 repayment for the years 1997/98 - 2005/06 inclusive.
We have been in detailed talks with HMRC Worthing (insolvency) and they want an Equitable Liability Claim Submited (because this all started before the law changed to Special Relief Claims).
My question(s) are: -
1. Can anyone suggest a text resource detailing the technical processes of the Claim? There is little on HMRC as this is obsolete piece of legislation!
2. Client has made 3 cash payments of £350 and there are tax repayments for 07 - 10 tax years, all of which has been allocated against the oldest debt - 97/98 determination - any thoughts how we can get these "unallocated" as the determination figure will certainly be within the scope of the EL claim.
3. The text I have read suggests that penalties/interest should remain payable, although the suggestion would be that the late filing penalties should be cancelled as they would not be due (based on no tax owed for the years) - is it plausable to request these figures (together with interest) be included.
I bit of a complicated issue this near deadline but even if someone can point me to some techinical literature on the subject I would be grateful.
Thanks!
Replies (4)
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Phone a friend?
You have a lot of issues it may be too late to do much now if you have reached this stage. Going so far back is unusual - we would normally try very hard to limit it to 4 or 6 years. The people you are dealing with do this for a living and so you need to have someone on your side with equal expertise.
Can I recommend that you talk in the first instance to Richard Clutterbuck - Google him at Francis Clark, Torquay, he is ex-HMRC and deals with a lot of CIS/PAYE investigations of all shapes and sizes. Experience counts in these negotiations and to be frank you are not going to get much sense from a book on this.
Your other choice is going to one of the tax charities - the Low Income Reform Group (LITRG) know all about Equitable Liability and so may be able to assist your client.
Hope that helps you,
Virtual Tax Support for accountants: www.rossmartin.co.uk
Interested
Simon,
How did you get on? I have a CIS subbie also with returns out of time - would be interested to know what happened.
Thanks