any advice what can I do about HMRC penalty?

HMRC VERY HIGH PENALTIES

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I was working in the club in years 2011-2014, never declared self employed, my English was bad and I was told I didn't have to. Then, 8 years ago HMRC tax man turned up to my doors with £ 55000 bill for penalties fpr self-assesment. I got in touch with them and offered repayments of £50 a week ( I was only earning £250 a week back then), but they didn't accept and said they will most likely procede with bankruptcy. But I never heard from them again, until 8 years later in March 2024, when I had taxman appear on my doorstep again with the same bill of £55000. Can anyone advise if I can do anything, I can't afford to pay it, I didn't know you could appeal the penalties, is there anything I can do to at least mitigate them? I earn £ 22000 a year

Replies (25)

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By David Ex
27th May 2024 21:39

Speak to an accountant.

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By Paul Crowley
27th May 2024 22:15

You need personalised advice on this.
A tax liability is never written off, even it it is not being pursued. Get to see an accountant with the original assessments.

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panda ketteringUK
By ketteringUK
27th May 2024 22:54

If you are not a homeowner , not thinking of buying a home in the next six years, not having an employment within a regulated sector, not being subject to immigration restrictions, etc then it will cost you £700 to apply for a bankruptcy.

Otherwise, seek an advice from a keen accountancy practitioner, although that will be quite a fee anyways.

Sounds like you had untaxed income - Did you not think that that's not strange?

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By alepan
27th May 2024 23:29

Hi, I didn't declare income or filled out self assessment as I was told I didn't have it because I didn't earn enough to pay tax. The £ 55000 is penalties and I still don't understand it all, I read somewhere that it is possible to appeal but I am not sure if it's not too late. Thank you, I will look into bankruptcy, although I don't understand why HMRC didn't do anything about it 8 years ago, but now, when I just wanted to settle down and start a family

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Replying to alepan:
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By Paul Crowley
28th May 2024 02:41

£55,000 in penalties seems very unlikely.
How much was the tax that was assessed?

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Replying to Paul Crowley:
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By alepan
28th May 2024 02:44

I don't understand the letter what the amounts are for, it shows each year and penalty, then £17000 penalty is for year 2015 when I didn't even work

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By FactChecker
28th May 2024 01:02

It's a shame that earn you £22,000 a year - in that if it was £20,000 or under I would have suggested approaching https://taxaid.org.uk/taxaid-helpline#
But I'm not aware of any other free (and reliable) source of advice.

If your English is bad, have you asked around the community that speaks your native language whether they can recommend an accountant ... to investigate the situation / explain the options to you / and if necessary help you to negotiate with HMRC.

FWIW your starting point must be to get clear *exactly* what this £55,000 'bill' is for - if it is entirely for non-filing and/or late payment penalties (which seems unlikely) then that is a quite distinct problem to having been assessed for undeclared income and unpaid tax (plus interest).

You definitely need an accountant to help you and this will cost - so finding one you trust and with whom you can communicate easily should be your most immediate priority. [And DON'T throw away any letters you've received from HMRC.]

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By alepan
28th May 2024 02:42

Thank you for reply, it is very stressful situation for me. Do you think it's not too late if it goes back to 2011 to do anything now? Can I disagree with this amount of penalty?

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By kim.shaw-and-co.com
28th May 2024 02:43

Sounds like HMRC are out of time to make Section 8 Decisions or Reg80's against the former employer ... who ought to (have) be(en) their first port of call as it sounds like OP was a engaged as a worker. Perhaps they went 'belly up' to escape liability themselves ?

I can only second the guidance of others here to gather all the paperwork you have together and ask for an initial meeting with a tax advisor who will offer you a free initial consultation, preferably one who works in a firm with an in-house Insolvency Practitioner (IP). Between them, they ought to be able to consider options in relation to the fact pattern and set you on an appropriate path for your circumstances.

I have had colleagues who work as IPs successfully fend off HMRC Debt Management for clients who called up in floods of tears after baliffs turned up at their door threatening to seize all their worldly goods over a 3-month past due income tax bill in years gone by ... there are two separate issues :

- the first is handling HMRC Debt Management's aggression and seeking agreement of a fair and reasonable settlement. This needs professional guidance ... if you have no assets with which to bargain the likelihood is that they will press for bankruptcy unless you can get somewhere with the second...

- the second is ensuring that any assessments raised are enforceable, and correctly calculated. For that you will need evidence of your original earnings and all correspondence received from HMRC. Penalties and underlying tax/NIC are completely separate issues. The less an advisor has to probe for information (or wait for you to find it), the more efficiently they can help you and that is likely to be reflected in what their help will end up costing you. So do your homework and prepare your file !

Be honest about your financial circumstances, assets and position with your advisors - do not conceal anything from them. If they are experienced dealing with issues like yours they will be able to broadly explain your options and help you make the best choices after considering all the facts fairly easily. The worst thing you can do in these circumstances is not to tell them about income or assets you currently have (or have recently transferred).

I hope you get the help you need.

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Replying to kim.shaw-and-co.com:
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By kim.shaw-and-co.com
28th May 2024 17:29

kim.shaw-and-co.com wrote:

Sounds like HMRC are out of time to make Section 8 Decisions or Reg80's against the former employer ... who ought to (have) be(en) their first port of call as it sounds like OP was a engaged as a worker. Perhaps they went 'belly up' to escape liability themselves ?

Ignore this - other thread clarifies likely self-employed. Sound like what might help is to compile is evidence of payments made to the club to set against income received after deductions from receipts, but the timelines are concerning if assessments made were not appealed and/or payment(s) were made towards them in the past.

It's very much looking like OP is firmly on the 'back foot' and a great shame help was not sought earlier before trying to negotiate with HMRC 'unrepresented'.

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By Paul Crowley
28th May 2024 05:27

Were you the leader of a group of people?
As in the 'employer' paid you the money for all three of the people, and they only had your name and paid the money to you for you to share with the others?

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Replying to Paul Crowley:
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By Paul Crowley
28th May 2024 16:24

Ignore this as your other thread covers the point.

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By More unearned luck
28th May 2024 17:40

Additional points to explore with your newly appointed accountant/tax adviser

1. Appeal tax and penalty assessments. Nothing to lost by doing so, even if the chance of the appeals being accepted (as it would be) is very small. Genuine non receipt of the assessments might make a difference (but difficult to prove a negative).
2. Complain to HMRC about misadministration (8 years of silence).
3. Consider if ESC A19 applies.
4. Consider if special relief applies.

Finally a suggestion of last resort, not to be explored with your new adviser, consider a moonlight flit, especially to a country where the UK doesn't have a MARD agreement.

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Replying to More unearned luck:
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By alepan
28th May 2024 18:13

Thank you for advice and not judging me for the mistakes I have made.i called HMRC again today and the man was very helpful, he said I must complete the tax returns, and since I don't have accountant and I can't afford one, they offered help. He was also very surprised when looked into my situation and penalties, and I hope they can help. I'm not a criminal and I honestly didn't mean to become tax evasion, I just didn't know I done anything wrong. Thank you again for taking your time in giving me the advice that I really badly need

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Replying to alepan:
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By Paul Crowley
28th May 2024 19:24

Given the sums involved, GET AN ACCOUNTANT.
He will make tax reducing claims for expenses of probably 10 times the cost of his, which itself will reduce the tax.
DIY is only for people that understand UK tax law.

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Replying to Paul Crowley:
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By alepan
28th May 2024 19:35

Thank you so much, I'm really grateful

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Replying to alepan:
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By alepan
28th May 2024 20:01

Do you really think that's possible? Could I really face affordable payments? After HMRC visit in March, I was going through the grief of the loved one, I called and made arrangements so they don't bankrupt me, and they agreed on £300 a month, even though they didn't accept £200- 8years ago, and they set up direct debit for 11 months for £300 and then in March for £53000, but lady said I must call again in February and the agent will do the same for next year so they don't bankrupt me. But even this is a lot of money for my little wages, I don't want to go back to dancing as it was horrible job and environment to be around, I'm not like that,I struggled all the way through. But the agent I spoke today seemed shocked that they agreed on this... I really hope I can sort this issue and that I don't have to go bankrupt, I think it would just killed me. Thank you everyone for sorting much professional advice I appreciate it

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Replying to alepan:
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By alepan
28th May 2024 20:01

Do you really think that's possible? Could I really face affordable payments? After HMRC visit in March, I was going through the grief of the loved one, I called and made arrangements so they don't bankrupt me, and they agreed on £300 a month, even though they didn't accept £200- 8years ago, and they set up direct debit for 11 months for £300 and then in March for £53000, but lady said I must call again in February and the agent will do the same for next year so they don't bankrupt me. But even this is a lot of money for my little wages, I don't want to go back to dancing as it was horrible job and environment to be around, I'm not like that,I struggled all the way through. But the agent I spoke today seemed shocked that they agreed on this... I really hope I can sort this issue and that I don't have to go bankrupt, I think it would just killed me. Thank you everyone for sorting much professional advice I appreciate it

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Replying to alepan:
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By kim.shaw-and-co.com
28th May 2024 20:17

alepan wrote:

Thank you everyone for sorting much professional advice I appreciate it

In case you are not clear, nobody has given you any professional advice. The only advice you have been given is to engage a professional accountant (and some help with what to put together / issues to discuss at the first meeting) in respect of the tax "debt" and to contact stepchange (on the other thread) in respect of the debt (if you admit it).

I think you are missing the point that you are not receiving professional advice here and "free" guidance is very clearly suggesting that you either contact or seek an initial consultation with a professional tax advisor experienced in handling tax settlements and disputes with HMRC.

The difficulty with constantly avoiding paying for professional advice is that you can make serious mistakes in your dealings with HMRC which make the situation impossible to unravel later. There is a perception that people cannot afford accountants but very often the outcome is that they cannot afford not to have consulted them.

If you are satisfied patching over the cracks trying to handle HMRC on your own until the next time they change their mind and proceed to instigate bankruptcy proceedings against you that is your choice. The advice given to you is very clear - and that is to present all relevant information to a qualified professional in respect of the alleged tax debt.

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Replying to kim.shaw-and-co.com:
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By alepan
28th May 2024 20:34

Thank you for your honesty, I do realise how serious situation I am in now, and that I must find a budget for the accountant, otherwise my life will be over. I have left the dark past behind me, I've been working full time for last 7,5years and I'm also at university studying business and management,trying to get a degree to have a better future. But bankruptcy is my worst nightmare, I wanted to start my own family, but seems like bad choices of my past will hunt me forever. Unless I can sort the mess I got myself in when I was 19years old... The biggest mistake of my life. But hopefully I will get a good accountant that can help me, thank you again

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Replying to alepan:
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By kim.shaw-and-co.com
28th May 2024 23:31

alepan wrote:

Thank you for your honesty, I do realise how serious situation I am in now, and that I must find a budget for the accountant, otherwise my life will be over. I have left the dark past behind me, I've been working full time for last 7,5years and I'm also at university studying business and management,trying to get a degree to have a better future. But bankruptcy is my worst nightmare, I wanted to start my own family, but seems like bad choices of my past will hunt me forever. Unless I can sort the mess I got myself in when I was 19years old... The biggest mistake of my life. But hopefully I will get a good accountant that can help me, thank you again

Genuinely, I wish you good luck with this and hope you get the right help. There is too much at stake for you to try to deal with it on your own, and you need an advisor experienced in both negotiation with HMRC and handling this sort of situation to recommend the best approach to you.

If you get the right person and present them with all the relevant facts and documentation they will be able to steer you well. They will also be honest with you about prospects of success trying to get the alleged debt permanently reduced. This is likely something you need to know and plan around sooner rather than later if your goal is to find the best way to move forward. It involves them considering :

- whether the assessment/penalties were reasonable in the first place (for this as a minimum they need relevant facts about your income and expenses in the years for which taxes have been assessed)

- what you did or didn't do and why with a timeline (particularly in relation to penalties)

- whether HMRC followed all necessary procedures in their dealings with you over the whole period and whether or not they acted reasonably - so a chronological list of every action by you or them in date order will help.

- what prospect you have of reducing or eliminating any alleged tax debt and the scale / nature of the penalties sought.

HMRC may take the view that some money is better than no money in the short term and "string you along" for as long as you keep paying them regularly, but they have protocols internally in these situations they are sometimes not the best at sticking to.

At the first sign of any cash flow problem or something in your life which makes meeting a agreed payment that is beyond your means to sustain impossible, they would withdraw any interim agreement. They may also then proceed with bankruptcy proceedings more easily following a breach of agreement and that is unlikely to help solve anything for you.

With an interim payment arrangement agreed over the phone, you may not understand how much of the debt you would actually be paying off rather than just covering interest. This of itself is problematic and HMRC may need to be 'encouraged' to be transparent with you how they have set the arrangement up.

With the time you have bought yourself by making an emergency verbal agreement, getting the professional advice you need is likely still possible before things proceed down a particular path.

It is important to keep in mind that dealing with collection action is completely separate to considering the underlying debt, whether it can be mitigated and what is happening in relation to accruing interest on the alleged debt in the meantime.

The longer the period after any tax debts arose and you first became aware of them, the more difficult (and expensive) it can be to agree a favourable resolution - so the message is really a recommendation to likely "act now" rather than later before things get any worse.

If you are not confident in whoever you meet, do not hesitate to try another you feel you trust, but do stick to members of a recognized professional body who are fully accountable for their advice. Tax accountants are only people - and you are trusting them with your future - so it is worth making extra effort at the beginning to find yourself the right person to help you. Fees are only one factor in the equation and it is the outcome which matters in a situation such as you have explained.

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Replying to alepan:
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By alepan
28th May 2024 20:01

Do you really think that's possible? Could I really face affordable payments? After HMRC visit in March, I was going through the grief of the loved one, I called and made arrangements so they don't bankrupt me, and they agreed on £300 a month, even though they didn't accept £200- 8years ago, and they set up direct debit for 11 months for £300 and then in March for £53000, but lady said I must call again in February and the agent will do the same for next year so they don't bankrupt me. But even this is a lot of money for my little wages, I don't want to go back to dancing as it was horrible job and environment to be around, I'm not like that,I struggled all the way through. But the agent I spoke today seemed shocked that they agreed on this... I really hope I can sort this issue and that I don't have to go bankrupt, I think it would just killed me. Thank you everyone for sorting much professional advice I appreciate it

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Replying to alepan:
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By kim.shaw-and-co.com
29th May 2024 11:55

alepan wrote:

Do you really think that's possible? Could I really face affordable payments? After HMRC visit in March, I was going through the grief of the loved one, I called and made arrangements so they don't bankrupt me, and they agreed on £300 a month, even though they didn't accept £200- 8years ago, and they set up direct debit for 11 months for £300 and then in March for £53000, but lady said I must call again in February and the agent will do the same for next year so they don't bankrupt me. But even this is a lot of money for my little wages, I don't want to go back to dancing as it was horrible job and environment to be around, I'm not like that,I struggled all the way through. But the agent I spoke today seemed shocked that they agreed on this... I really hope I can sort this issue and that I don't have to go bankrupt, I think it would just killed me. Thank you everyone for sorting much professional advice I appreciate it

Are you an AI bot, alepan ? This is a copy/paste of your comment above to which a response has already been provided.

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Replying to kim.shaw-and-co.com:
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By FactChecker
29th May 2024 12:39

To be fair, both (identical) posts are date/time-stamped at 28th May 2024 20:01 ... which suggests they were posted at the same time as each other (the old 'hit Post Reply twice' problem).
The way in which the Sift software then mangles the presentation of comments, so that they appear out of the order in which posted, doesn't help of course!

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By kim.shaw-and-co.com
29th May 2024 17:04

FactChecker wrote:

To be fair, both (identical) posts are date/time-stamped at 28th May 2024 20:01 ... which suggests they were posted at the same time as each other (the old 'hit Post Reply twice' problem).
The way in which the Sift software then mangles the presentation of comments, so that they appear out of the order in which posted, doesn't help of course!

How odd ... it seems from that technological intervention originates in the website rather than the poster !

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