I would go old-school, write a full letter of explanation to HMRC and Companies House, ask for their guidance and suggestions, then do nothing. Should nasty chasing letters emerge, refer them to your correspondence. Full disclosure, mitigating circumstances - can't imagine penalties would be upheld at a later date if they need to be appealed.
My take on audits is that they start with the premise that everything is correct, then look for evidence to support that theory. Until they become truly independent (imposed by a third party rather than appointed by the Company being audited) I can't see anything changing - in theory that's HMRC's role, but they don't have the resources to do that for every Company.
When the "catch-up" Tax Returns were issued there should have been 3 months in which to file without penalty. If all years were issued at same time I would have expected 4 years fines now, so that seems odd. Were they submitted after the 3 months deadline? Can appeal on Covid-related basis be used (paper Returns, impossible to meet due to lockdown, blah blah...)
Not done this for a long time, but there was an online legal firm I used (all totally above board) who would send a letter before action, at a cost of just £3! My personal take was that if the debt wasn't paid after they received that letter, pursuing through the Courts was likely to be a waste of my time and effort. The only time I did go through the Courts was prior to discovering the former route, I obtained judgment with an order to pay £1 per week, which they did for about a month then declared bankruptcy. A quick Google showed that (eg) Lovetts Solicitors still provide this service.
I'm assuming deduction was at 30% as presumably the Company wouldn't have registered as a subcontractor, so contractor couldn't verify? Do you have evidence of deduction?
He was eligible at HMRC's cut-off date, but he would need to submit a false answer on his application to get any money (where they ask if he is still self-employed), that's the issue here.
We had a similar situation a while back. Turned out the guy had entered into an IVA some time prior, and whilst his home address tallied with the HMRC records for the ID check when he phoned, all correspondence went to the IVA administrator's address.
My answers
I would go old-school, write a full letter of explanation to HMRC and Companies House, ask for their guidance and suggestions, then do nothing. Should nasty chasing letters emerge, refer them to your correspondence. Full disclosure, mitigating circumstances - can't imagine penalties would be upheld at a later date if they need to be appealed.
My take on audits is that they start with the premise that everything is correct, then look for evidence to support that theory. Until they become truly independent (imposed by a third party rather than appointed by the Company being audited) I can't see anything changing - in theory that's HMRC's role, but they don't have the resources to do that for every Company.
When the "catch-up" Tax Returns were issued there should have been 3 months in which to file without penalty. If all years were issued at same time I would have expected 4 years fines now, so that seems odd. Were they submitted after the 3 months deadline? Can appeal on Covid-related basis be used (paper Returns, impossible to meet due to lockdown, blah blah...)
Not done this for a long time, but there was an online legal firm I used (all totally above board) who would send a letter before action, at a cost of just £3! My personal take was that if the debt wasn't paid after they received that letter, pursuing through the Courts was likely to be a waste of my time and effort. The only time I did go through the Courts was prior to discovering the former route, I obtained judgment with an order to pay £1 per week, which they did for about a month then declared bankruptcy. A quick Google showed that (eg) Lovetts Solicitors still provide this service.
Hmmm - no job, no money - on what basis would US accept him as a resident?
I'm assuming deduction was at 30% as presumably the Company wouldn't have registered as a subcontractor, so contractor couldn't verify? Do you have evidence of deduction?
He was eligible at HMRC's cut-off date, but he would need to submit a false answer on his application to get any money (where they ask if he is still self-employed), that's the issue here.
We had a similar situation a while back. Turned out the guy had entered into an IVA some time prior, and whilst his home address tallied with the HMRC records for the ID check when he phoned, all correspondence went to the IVA administrator's address.
I thought dynamic coding was introduced to solve this sort of problem.
Presumably you're sure the employee has no other employments or pension income etc?