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Years of unpaid tax - HMRC approach and cost?

HMRC Disclosure / Self Employed / Unpaid SA Tax

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I have a client who has approached me, wanting to come clean to HMRC about several years of unpaid tax.  The client is a self-employed journalist and has previously been made bankrupt by HMRC!

I have asked the client to prepare their estimate of what their income and expenditure was over the period so we can calculate the potential liability, with a view to making a disclosure and settling the amounts outstanding.

I note that there is a formal procedure for making a disclosure to HMRC.  I haven't done this yet, nor has my client - as I think it will take significant time to assemble the relevant information.

The deadline for the 2020/1 SATR is just around the corner.  I have suggested we start with that, then begin work upon the overdue returns.  Is that a sensible approach?

What's your experience of the disclosure scheme?  If the client has minimal assets, e.g. assets of £30k, but tax liability is £50k (before penalties), will HMRC accept an offer of £25k-£30k to settle the outstanding debt?  Or would they just push for the full £50k and bankruptcy regardless?

The client has had a difficult few years, including the death of their long time partner in marriage.  Does this help mitigate penalties / total amount payable in any meaningful way?

Any views (aside from 'run away') and experience on how to best approach this appreciated. 

Replies (4)

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By Wanderer
17th Jan 2022 14:56

Previously hasn't paid their tax. Didn't learn & is in the same position again.

I have tried to help people in a similar situation in the past but leopards & spots.

You've been running your own practice for about two years so I can understand your "(aside from 'run away')" comment however you'll learn in time. I'd say thanks but no thanks.

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Red Leader
By Red Leader
17th Jan 2022 15:00

As well as getting 2020/21 done by the deadline, don't forget to amend 2019/20 by 31 Jan.

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By David Ex
17th Jan 2022 15:54

If he owes HMRC more than the value of his total assets, who’s paying your fees?

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By Catherine Newman
17th Jan 2022 16:01

When was the bankruptcy? The clock starts again with a new UTR since the receiving order. Does that help in any way?

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