HMRC policy on debt
I would appreciate thoughts on how HMRC may approach the following?
new client walks in off the street. hasn't filed tax returns for 5 year.
he is not vet registered, although he should have been from 2006.
I estimate the VAT arrears are £300k, plus interest plus penalties.
he only has £75k of cash with no other assets.
his income tax position is reasnbaly up to date - he had been paying £5,000 lump sum every now and again which has helped.
We advised that we have an obligation to inform HMRC of the late vat registration and he accepts this.
he does want to do the correct thing. i think he has had some personal issues during the past few years, hence the position he now finds himself in.
he would like to pay what is owed but realistically this might not be possible.
his turnover is £300k pa and his trading profits are c£70k per annum. his business is arranging private tutoring (not tutoring personally).
any thoughts how you think HMRC will react when he comes clean.