Very late registration for SA

Very late registration for Self Assessment

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We have a new client that hasnt registered for Self Assessment for 25 years, they were self employed and receiving income of over £100k, this isnt profit though, that I'm told is in the region of £30-£35k, how do I register such an old business for Self Asessment. 

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By rmillaree
10th Jun 2024 17:20

i think you need specific specialist (paid for) advise here.

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By FactChecker
10th Jun 2024 18:15

"We have a new client that hasn't registered for Self Assessment for 25 years, they were self employed and receiving income of over £100k, this isn't profit though, that I'm told is in the region of £30-£35k, how do I register such an old business for Self Assessment."

Just to be clear, you are saying that:
1. S-E individual has undeclared profits of c. £30k-£35k p.a. over a period of 25 years?
2. You've seen no accounts to indicate whether those profits are themselves accurate?
3. You've accepted this individual as a new client?

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Replying to FactChecker:
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By Simon_GNR
12th Jun 2024 14:27

The credit controller of the firm I worked for 25 years ago had a file labelled "Bargepole clients", of whom he disapproved of the partners taking them on or retaining them as clients. This case sounds like one of them.

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By Paul Crowley
10th Jun 2024 19:04

This could be an insolvency case
Money up front if you intend to do even a guess at the tax liabilities.

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Replying to Paul Crowley:
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By David Ex
10th Jun 2024 19:59

Paul Crowley wrote:

This could be an insolvency case
Money up front if you intend to do even a guess at the tax liabilities.

My thoughts exactly!

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By SXGuy
10th Jun 2024 19:30

Rather you than me.

Why the sudden need to come clean after all these years?

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Replying to SXGuy:
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By rmillaree
10th Jun 2024 20:08

i guess us accountants cant choose when clients turn up and say stuff like that.

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Replying to rmillaree:
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By SXGuy
11th Jun 2024 07:39

Correct but you can decide to take them on or not and there must be a hefty fee involved because id not like to be dealing with 3 decades of tax allowances penalties and interest.

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By Justin Bryant
11th Jun 2024 09:08

I don't see the big problem here. Isn't this simply a case of DDS (if HMRC want to do COP8/9, that's up to them mainly), except for past 4 years (which an be filed as usual)? I mean, that's what it's for isn't it and should be encouraged more to reduce the tax gap?

https://www.tax.org.uk/tax-avoidance-tax-gap-explainer

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Replying to Justin Bryant:
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By rmillaree
11th Jun 2024 09:22

its more the specialist nature of sorting the detail here - eg ref negotiating penalty rates etc and the overall implications of what is being done - if the op needs to ask about the registration imho it sounds like they may not be sufficiently clued up ref getting the technical detail right to best minimise damage for client. as you say sa registration would follow on from the relevant disclosure and sometimes it may be better or worse to make disclosure - quick look at the disclosure service suggests that can be used right up to 05/04/2023 - which would leave no sa returns to do that are overdue with only normal registration needed for year just finished.

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Replying to rmillaree:
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By CW2012
11th Jun 2024 11:30

I will try and answer the issues raised, we haven't accepted this client, I have never in 30 years had a registration this far out of date, the profits are anticipated to be £25 to £35K per year, apparently there are records although they may be incomplete, it is a voluntary disclosure and hopefully it wont be perceived as fraud, the client is willing to be frank and open. If we do decide to act then we will ask for a deposit against services.

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Replying to CW2012:
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By David Ex
11th Jun 2024 14:51

CW2012 wrote:

hopefully it wont be perceived as fraud, the client is willing to be frank and open.

Be interested to know how this plays out. Someone turning over £100k pa for decades and didn’t think to pay income tax (and presumably VAT)?! Why the decision to be frank and open now??

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Replying to David Ex:
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By rmillaree
11th Jun 2024 15:10

Why the decision to be frank and open now??

perhaps they know the bill will double if they dont sort - note if hmrc have an inkling here client didnt come forward voluntarily i suspect they will be found out quicker than the prosecution team and police in the Karen Read murder trial in the US

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Replying to Justin Bryant:
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By More unearned luck
11th Jun 2024 15:00

Without knowing why the client has been a ghost for 25 years, I'd have thought that this is the sort of case where HMRC prosecute and legal advice should be sought at the outset. The WDS and tax returns would still leave the first 5 years untaxed and unpunished without recourse to the criminal courts.

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Replying to More unearned luck:
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By Justin Bryant
11th Jun 2024 15:45

WDF (not WDS) is for offshore, so it's DDS assuming it's UK only and so what re first 5 years? Isn't it better he does DDS in the first place?

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Replying to Justin Bryant:
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By More unearned luck
11th Jun 2024 16:32

One of the first questions asked when accessing the online WDF is 'are you disclosing an offshore or onshore matter or both?'

Indeed, do make the online disclosure (or more precisely give notice of the intention to make a full disclosure in due course) ASAP, but anticipate the worst.

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Replying to More unearned luck:
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By Justin Bryant
11th Jun 2024 17:13

"If your disclosure involves income, assets or gains outside the UK, you should use the worldwide disclosure facility to make an offshore disclosure. This service is a part of the digital disclosure service."

"If you deliberately misled HMRC about this income
If you’ve deliberately not paid enough tax you’ll have to pay us what you owe for a maximum of 20 years. Deliberately means that you knew you owed tax but chose not to tell us or that you knew the figures on your tax return were wrong when you submitted it."

https://www.gov.uk/government/publications/hmrc-your-guide-to-making-a-d...

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By Roland195
11th Jun 2024 15:23

Also fascinated to see how this develops - did he go to see a 25th anniversary showing of The Matrix and find the SA1 form he meant to send to The Inland Revenue in the pocket of his trench coat?

How has he lived his life over the past quarter of a century without this being a problem?

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Replying to Roland195:
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By CW2012
11th Jun 2024 16:05

I'm finding out, turns out he is vat registered and has delivered returns up until things went digital, so there's vat to deal with separately from income tax. Never had a case this old, I anticipate an approach via DDS and disclose and make an offer

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Replying to CW2012:
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By David Ex
11th Jun 2024 17:47

CW2012 wrote:

turns out he is vat registered and has delivered returns up until things went digital,

Ouch! So very deliberate evasion then!!

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Replying to David Ex:
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By CW2012
11th Jun 2024 18:03

I am now thinking of The Contractual Disclosure Facility but to use this the client has to admit fraud and that looks to be a legal position not an accounting issue. I don't think our PI insurance would cover this, I have emailed solicitor , any thoughts

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Replying to CW2012:
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By rmillaree
11th Jun 2024 18:18

any thoughts"
"like any area of tax there will be experts here

the reality is hmrc will probably be happy that someone is coming back on board ship so as to speak but if you dont need the hassle seems no brainer to palm onto some specialist who deals with stuff like on consistent basis.

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Replying to Roland195:
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By Yossarian
11th Jun 2024 19:32

I'm visualising him selling fancy goods out of the back of a yellow van on Peckham market.

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Replying to Yossarian:
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By kim.shaw-and-co.com
11th Jun 2024 20:16

Yossarian wrote:

I'm visualising him selling fancy goods out of the back of a yellow van on Peckham market.

Lawvree doors ?

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By johnward
11th Jun 2024 18:18

Tell client you'll get back to him in 25 years time

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By johnward
11th Jun 2024 18:18

Tell client you'll get back to him in 25 years time

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Replying to johnward:
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By rmillaree
11th Jun 2024 18:34

if they write letter to hmrc in really sketchy handwriting addressed to newcastle metropolitan area tax office asking for advise as to what to do - it will probably take hmrc 25 years to let them know what what they want them to do.

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By Paul Crowley
11th Jun 2024 18:49

Registered for VAT without a UTR?
HMRC needs to get joined up and stop wasting time and money on MTD ITSA

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Replying to Paul Crowley:
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By David Ex
11th Jun 2024 18:54

Paul Crowley wrote:

Registered for VAT without a UTR?
HMRC needs to get joined up and stop wasting time and money on MTD ITSA

Yes. Maybe have a system to query why a VAT registered taxpayer randomly stops submitting returns.

If HMRC can’t do some basics, there seems little point in implementing more complexity.

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Replying to David Ex:
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By CW2012
12th Jun 2024 08:56

Agreed, get the basics right first, but the IT dept are ruling the roost down at the HMRC.

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Replying to Paul Crowley:
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By FactChecker
11th Jun 2024 19:00

There HAS to be more to this than OP has yet found out ...

unless client is incredibly naïve, he must know that the total bill is going to be (to use a technical term) ginormous!
So, either he's got plenty stashed away to cover that (which of course would raise further questions) OR he knows catastrophe is around the corner and doesn't care - for reasons that are probably more interesting than the tax handling process.

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Replying to FactChecker:
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By CW2012
12th Jun 2024 08:54

It makes you wonder doesn't it, I don't mind the hassle of sorting it out so long as A we get paid and B we don't suffer any litigation. Really it should be a hands up job and a deal done with the Revenue , fortunately the client has ceased trading and retired so we have an end point, it was the lack of pension contributions that kicked all this off.

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Replying to CW2012:
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By Rgab1947
12th Jun 2024 10:12

Ah, so he wants his pension.

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Replying to CW2012:
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By C Graham
12th Jun 2024 11:29

Prince Edmund:
They're coming! Run for the hills!

Baldrick:
No, my lord! They're coming from the hills!

Prince Edmund:
Run away from the hills! Run away from the hills! If you see the hills, go the other way!

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By bettybobbymeggie
11th Jun 2024 19:16

FWIW my advice would be to think twice about taking on this engagement.

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By towat
12th Jun 2024 09:07

Here's what I would do; Walk(run) away.

If you really want to help, advise the client to approach HMRC themselves and make full disclosure, then when a dialogue has been established you could offer to collate the figures, getting payment in advance.

I'm not a lawyer but this might become a criminal case so best tell client to get legal advice also.

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By Roland195
12th Jun 2024 09:42

From your latest updates, my considered professional advice is to run away with your fingers in your ears.

All other matters aside, if the client is proposing that by updating his tax position now, he will be entitled to a state pension and thus better off then I think he might be in for a bit of a shock. You don't want this disappointment laid at your door, particularly as there is no going back once this door is opened.

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Replying to Roland195:
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By rmillaree
12th Jun 2024 10:04

I am presuming the OP is well aware that there should be zero expectations that hmrc will do anything other than throw the book at this person

interesting question will this person be credited with years ni stamp IF they settle bills - i have had clients self employed submitting tax returns and paying taxes been denied opportunity to get their pesnion stamp past 6 years due to fact hmrc stopped billing them at the time and it wasnt noticed - will this person be allowed to go back before the 6 years (approx) deadline ref stamp (if they pay) or are they too late ?

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By Retrocanary
12th Jun 2024 10:43

"Thiis iss myy client. Doesn't shee loook like Laura Palmer?"

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DougScott
By Dougscott
12th Jun 2024 13:37

So £35k x 25 = £875,000. Say tax and NI at 30% = £260k. Also unpaid VAT on £100k for last 10 years, say £170k. So that's £430k plus interest, plus penalties, (which could easily double the bill) plus maybe a prison sentence. Has this guy got any assets to pay for all this or will he be made bankrupt? He may or may not get a state pension - I guess if he doesn't he should get pension credits! He might really be better emigrating to North Cyprus with any assets he can take with him....

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Replying to Dougscott:
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By Roland195
12th Jun 2024 13:47

Realistically, I don't think the extended holiday to a non-cooperative regime is even necessary as it appears he has gotten away with it for the past 25 years and has now retired with not even VAT registration putting his head above the parapet.

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Replying to Dougscott:
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By CW2012
12th Jun 2024 14:11

I think the vat only runs to 5 years behind, although there's nothing to say what's been filed previously is correct, I was thinking tax and vat at somewhere around £300k then interest and penalties, it feels like the HMRC would request somewhere between £400k and £500k. I am given to believe there are liquid assets, at the lower end of the anticipated tax bill though but potentially enough to cover the tax bills.

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Replying to CW2012:
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By C Graham
12th Jun 2024 14:17

5 years - lost during Covid then?

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Replying to CW2012:
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By FactChecker
12th Jun 2024 14:59

"I am given to believe there are liquid assets, at the lower end of the anticipated tax bill though but potentially enough to cover the tax bills"

... if you recall that was one of the two possibilities I posited earlier - when I didn't bother to spell out the likelihood of POCA then rapidly raising it's head.

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Replying to Dougscott:
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By SXGuy
12th Jun 2024 16:41

Wow his state pension top ups must be really worth it.

Won't say what id do in his position.

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By tractorboy
12th Jun 2024 14:27

My suggestion FWIW would be refer this on to as specialist firm experienced in COP9 enquiries. The likelihood is that there is going to be a need for a fair bit of analysis work which you can do at a cheaper rate than the specialists (fees up front) but you will have the support of an experienced team fronting this to the Revenue. This could turn nasty very quickly.

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Replying to tractorboy:
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By CW2012
12th Jun 2024 14:42

I had that thought also, I'd like to retain the analysis work so will approach a specialist on that basis.

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