CIS Subcontractor Catch Twenty Two Position after 14 years

CIS Subcontractor Catch Twenty Two Position...

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Hi we had a subcontractor client approach us in November last year saying he had four years tax returns outstanding and that HMRC were chasing him for some £16k in tax.  We approached HMRC and it appears that no tax returns apart from two years had been filed since 1999/2000. He did instruct an "accountant" who filed the two returns, but has subsequently disappeared. He supplied us with his records for the four years (2011 to 2014 tax returns) and we promptly filed these in December 2014.

Our client states that he has been self employed all these years as a subcontractor within the CIS scheme and had tax deducted, but has no records, nor can he obtain any details from the contractors he was working for. HMRC had determined the tax for 1999/2000 onwards and with penalties, interest etc this is how the £16k was arrived at, which is now down to £13k after we filed the above four years tax returns. HMRC have stated they do not keep records going back that far and are unable to help us, so we are unable to calculate any liabilities, nor file any tax returns as we have no details.

We wrote to HMRC in December 2014 and have today just received their reply. We suggested that as our client had been working within the CIS scheme, he had obviously had CIS tax deducted for each year that had not been taken into account. We also suggested that to resolve the matter, they accept that there is no tax liability for all the outstanding years, nor any refund due to our client, apart from any penalties. They have flatly refused our suggestion and will proceed bankruptcy proceedings against our client within the next two weeks.

I enquire whether anyone has had a similar case, or has any views on this position? We are considering taking this case to Tribunal.

Many thanks for any comments anyone is able to make would be appreciated.

Replies (6)

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By geoffwolf
28th Mar 2015 16:38

Equitable liability

You need to get this out of the hands of normal HMRC process and apply through HMRC head office. If there were records to enable 4 years returns to be produced are there any records going further back? If there are, then more accounts need to be prepared if your client is able to pay for the work.

Have you ascertained precisely how the alleged liability has been arrived at? What happened for earlier years? Did the client make payments?

I think you need to question your client about the intervening years?

 

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By chewmac
28th Mar 2015 20:30

Similar case
I have a similar case. I'll be watching replies with interest.

GeoffWolf- what do you mean HMRC Head Office? How do you get the case in their hands?

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blue sheep
By NH
29th Mar 2015 08:46

determinations

We had a similar case a few years ago, the liability was due to HMRC determinations which were not reversable due to the length of time it was ignored for by the client, even though we had records to show that the client was actually due a refund for all years.

HMRC are still chasing him for a determination from 2005 of £2850 (now £4172), this was a year he did not work at all.

 

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By LuKosro
29th Mar 2015 17:22

Hi

Have you asked him to try to obtain bank statements from his bank? This might help in determining his income / tax deducted over the years.

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By chewmac
29th Mar 2015 18:24

Old Records
HMRC have records going back to 60's
0300 056 0616
[email protected]

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By geoffwolf
29th Mar 2015 21:49

Head Office

You go up through the admin chain. The head office used to be at Somerset House and the main office dealing with potential bankruptcy was in Worthing.

Whether this is still the case I cannot say as I have been retired for several yearsa.

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