No accounts submitted to IR for 10 years

No accounts submitted to IR for 10 years

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A small business has approached me to so their accounts and on investigation I find that they have not submitted a tax return for over 10 years. They have also not registered for PAYE even though they have employed many people over the years., and I am pretty sure they should have registered for VAT. A complete mess!!.
Has anyone any advice please on what my first step should be. Should I contact the IR and let them know the full extent of the business dealings? If I do this of course it will open up a huge can of worms. What can the client expect.? Should I tell her to look for an accountant who has experience in dealing with the IR? Any advice would be much appreciated.
jenny jenny

Replies (5)

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By JSJ54
25th Oct 2006 13:36

I can recommend an ex-Inspector of Taxes
who may well be able to help you and your client.

Let me have a contact method & I will let you have his details. [email protected]

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By manoja
24th Oct 2006 17:00

Seek specialist help
I would recommend that you establish as many facts as you can and make a voluntary disclosure to HMRC. This will assist in minimising the penalty.

In view of the number of years involved and the potential tax at stake, you should obtain specialist investigation advice as there is a distinct chance that your client could face criminal proceedings. It appears from your posting that your client has also failed to register on all fronts and this would be viewed very seriously by HMRC. The best route for your client would be to obtain protection from prosecution under COP9, Civil Investigation of Fraud procedure. In return for making a complete and comprehensive disclosure of all tax irregularities, HMRC will not pursue with criminal proceedings against your client.

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By wdr
25th Oct 2006 09:41

Given the serious nature of the matter, it may be worth the clie
Although accountants are supremely well qualfied to address negotiations in this field, as has already been suggested, there are serious criminal aspects here 'Cheating the Public Revenue' where specialist legal advice should be sought.
Following 'Gill' the COP9 protection is dubious at best.

Better be safe here

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David Winch
By David Winch
24th Oct 2006 17:43

Specialist help
Jenny

I do think your client needs some specialist help with this one. It may be that a specialist can negotiate a reasonable settlement with HMR&C which involves no prosecution and just a payment to cover past tax liabilities plus interest plus a penalty (normally based on a percentage of the tax liability).

It may be possible, on the basis that all tax irregularities have been disclosed, to negotiate (what I would regard as) a reasonable penalty. Even so, if there has been a reasonable level of trading it is likely that the unpaid tax plus interest will have mounted up to a significant figure, even before the penalty is added. HMR&C are unlikely to want to see your client made bankrupt or go out of business (but they will expect her to borrow as much as she can from her bank to pay to them - they may agree to accept the rest in instalments).

There are two things you must NOT do. One is to pass any information to HMR&C about this without your client's consent. The second is to approach HMR&C with the intention of only disclosing part of the truth about past trading.

You also need to consider whether you are obliged to make a report to SOCA (not HMR&C) under the money laundering regulations. If you are a member of a professional body such as ICAEW check with them whether you can be exempted from the requirement to report on this occasion due to "privilege".

If you are not a member of a professional body then you will certainly not be exempt and so must report on the basis that your client realised that she should have been paying tax / PAYE / VAT and deliberately failed to get in touch with the tax authorities. You can report to SOCA online at www.soca.gov.uk . Do NOT tell the client that you have made a report (that would be "tipping off").

Failing to report or "tipping off" are each criminal offences which carry a maximum of 5 years imprisonment (that is imprisonment of you, not the client).

David

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By User deleted
26th Oct 2006 09:34

Recommendation
I conclude with a your other contributors you definitely need to seek specialist advice, we have found the firm of Appleton Richardson & Co to be of immense help.

you can access their Web site at www.appletonrichardson.co.uk

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