Unregistered tax driver

Unregistered tax driver

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A taxi driver arrived: has never submitted a return in 10 years. The firm he works for supplies the taxi and pays all taxi costs. They read the meter and take 60%, paid in cash. No receipts. Surprisingly large and well-known firm. My man now had enough of sleepless nights, knows he must come clean. 

1. Do you agree that there is a need to go back only six years?

2. What date should be given for start of self employment?

3. Is it likely that voluntary disclosure will avoid the £10/day penalties?

4. What about the £100 standard late filing penalties?

 

Replies (5)

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By duncanedwards
27th Feb 2015 14:48

Re 1, in what sense is his failure careless rather than deliberate which I understand is the determinant of assessment time limits?

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By Harrison88
27th Feb 2015 15:32

Deliberate

I think the background to this would leave HMRC very open to claiming the client has been acting deliberately and will therefore likely extend the number of years to the full 10, possibly even the 20 available to them.

He will be looking at a lot more than late filing penalties. Focus now should be on full disclosure to reduce percentage of tax lost penalties to a minimum. Interest will also be charged.

Edit: re-read. If they supply everything and he can only work for them then surely he's an employee?

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By duncanedwards
27th Feb 2015 14:54

Re 2
I would put the date on which he became self-employed, noting this to be estimated if necessary.

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James Reeves
By James Reeves
27th Feb 2015 15:08

Is he sure he is self-employed?

What attributes of his relationship with the large and well-known firm indicate that he is not employed by them? Have you run the employment status indicator toolkit? Can it be argued that he is in fact an employee and therefore his employer can bear the burden of all this outstanding tax and NI?

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By Anthony123
27th Feb 2015 17:13

Penalties

has he been issued with returns but not sent them back (in other words registered at the time he started) or has he never been registered?

This can make a difference to the penalty position.

If the former then you submit the returns for in date years and appeal late filing penalties - but for out of date years HMRC will assess and charge a percentage penalty by reference to the tax due on the basis he has been careless in not doing the returns sooner.

If he has not previously registered then late filing penalties are not in point. You need to draft a full disclosure of all years' income and be ready to negotiate the level of tax geared penalties for failure to notify.

In the latter case unprompted disclosure will lower the level of the penalty percentage.

How is he proposing to settle the bill?

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