Negotiating time to pay - VAT
HELP! I have a new client who has put their head in the sand for several years regarding outstanding VAT Returns. Surprisingly they were not chased by HMRC until late last year when they submitted the outstanding returns. They now have a £25,000 debt to pay.
My client has already managed to pull together funds of around £18,000, leaving a shortfall of £7,000 in respect of VAT but they will also have a tax liability to pay for 2012 and my fees for several years which they are hoping to include in a loan. They have agreement in principle for a £20,000 loan but at a pretty high interest rate with penalties for early settlement - sounds very loan sharkish. We are currently checking VAT and have finalised revised Accounts for 2006 to 2009 but are still working on later years with a view to approach the bank for a better deal - again Bank are interested subject to final accounts. It will take me approximately 10-14 days to finish these figures. The last Accountant they used made a right mess of things to put it bluntly (which is why we have gone back). One bonus is that trade has also picked up dramatically this year and it is even possible that my client can clear the debt out of income in the next two months.
Yesterday they had a letter saying that a VAT collector would call back on the 30th. I have spoken to him this morning with a view to negotiation a three month payment plan of £8,000ish per month but he was not having any of it. He would not admit to being a bailiff or say that he worked for anyone other than HMRC on the phone so I am not quite sure who he is - probably a bailiff. He politely but firmly refused the payment plan and is intent on taking distraint on goods (including work vehicle) rather than allowing my client to settle the debt over three months. He says that is the way things are these days and suggested that nobody has the power to override his decision. When I suggested that he could not take possession of work items e.g. work vehicle specifically fitted out for trade he said that he could and would suggesting that they would have to hire a van. He did add that he did not want to stop them working - huh.
These people have very little by way of assets except a property on mortgage probably in negative equity. They have five young kids - second marriage for both - and suffered massively in the early days of the recession. They are now really trying to put their house in order and I want to help them do that. The original Accounts prepared for the 2011 tax year showed a massively overdrawn capital account, which is what is blocking the bank loan at the moment, but information has come to light that I anticipate will correct that position when we have revised the figures however the profits are still quite low - £17,000 . These people have been treated badly by their previous accountant (Chartered) and I want to show them that we are not all like that.
Any advice as to what I do next would be welcome. I was wondering whether we could even take out a restraining order to allow time for payment and if so how we go about it. Surely there must be something on their side if they are trying to sort themselves out and find the funds to pay in that short a period?
- Client change of address for VAT - can't do it online?! 404 8
- Has anyone been told of the extra Sage Payroll fees for auto enrolment? 38 2
- Capital Gains on Inherited Property 21 1
- Company Fuel - Reimbursement to avoid Benefit in Kind 40 4
- Charity reserves 327 6
- Property scam victim 214 3
- Early repayment of CIS deductions - sole trader 84 4
- Partnership profit share - tax efficient for husband and wife 113 2
- Client using boyfriend's personal account 347 9
- ICAEW student, Dilema with client & boss 685 16
- Software to use 105 3
- Using Director's bank account to receive payment from customer 37 1
- Where can I get Quickbooks help 162 6
- Playstation 4 - Allowable expense or not? 2,499 35
- Is there is a tax neutral way of splitting a company? 101 4
- Rental Property on Self Assessment 96 1
- Discretionary trust reporting 86 1
- Benchmark Scale Rates 71 1
- Rollover relief and private use 102 2
- Annual Investment Allowance (AIA) 221 3
- Desperately seeking Susan, Sam or anyone with any other name 1,065
- Experience with Islamic investor following Sharia-compliant rules? 567
- Darwinpay Partnership Assessment 378
- S464A Charge to tax: conferring benefit & BIK 284
- Charge out rates in London? 230
- auto enrolment - calculation of first pension deduction 224
- Personal consumption by landlord 196
- Interest on Loan to a Company 182
- Bank interest in 'near' facility recall situation 163
- Agent fees to sell business 151