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Partner's Tax Return problems now we are together?(16 Posts)
Long story short - So me and my partner met and casually dated just over a year ago, then I fell pregnant and we decided recently to move in together. We are now living together and are making a joint claim for Tax Credits as I have a low income, but he works 40 hours and yet we were still advised to make the application. In looking through paperwork etc that he has kept (incredibly poorly I might add) I have noticed that he has been really sloppy with not returning tax assessment forms from a couple of years ago and hasn't even bothered changing his address with a few various house moves he has had over the last few years. He hasn't got good records of things like payslips, p60s etc and I'm at my wits end trying to work out how I go about helping him sort out this backlog of financial tax mess
Any advice appreciated
get him to get an accountant : the fees you pay them will be less than the amount they will save you both in further penalties and tax credits.
lots of helpful people on here
You can fill in the tax credits form and tick 'this is an estimate' then you can be fairly certain they will find out to the last pence what he owes and hound him forever that way you have been honest, you don't know exact figures.
I suspect the best way to start is not mother him and do his dirty work. Give him a kick up the bottom and make him do it all himself.
Can you claim tax credits if you aren't paying tax?
He has paid and still pays tax as he is PAYE and his taxes are taken off his pay by his employer. I believe from a couple of p60s and payslips from various years and jobs, he has no tax owing etc, but he just hasn't filled out the tax return assessments etc. And has letters and things stating he has incurred debts owing because of penalties in not filing and late filing. I am slowly trying to gather every single piece of paper I can so I can speak to CAB with him, but its a tough job trying to work out what he has and doesnt have
Oh dear - that does sound like a mess although if he has been paying tax through the PAYE system recently then that's something, but incurring fines etc with HMRC is a bad thing and he really needs to take it in hand to stop them spiralling out of control. Do you mean that he has outstanding self-assessment income tax returns to complete from previous self employment?
Either way you are in a quandary - either you sort it all out for him and he ends up doing nothing to help himself, leaving you frustrated and possibly resentful but able to claim tax credits, or you leave it to him and possibly miss out on money that you could be entitled to and which could help your family finances.
Assuming he was self employed prior to his current PAYE position, would he have been paid cash in hand? If not, then you could ask his bank for statements to get some idea of when money was going in to calculate his earnings? Or if it was cash in hand, would he had had emails or similar arranging the work? It sounds like a big job, which is probably why he is burying his head in the sand, but could you use a calculator to give you an estimate of how much you might be entitled to in tax credits in order to motivate him? If he thought of that as 'payment' for going through his finances and working everything out, it might encourage him to get to it.
And it might also be worth reminding him that nothing is worse than not knowing - having fines and penalties hanging over his head that could affect your credit for years to come is a nightmare. At least if he sorts it out, works out what is owed and comes up with a plan he will be able to work through it and get it sorted, even if it does take a while.
I hope you manage to persuade him, but if you want more advice then I am happy help as much as possible (mostly from my own self assessment experience and working for an accountant) and there are plenty of knowledgeable MNers who might be able to offer some more specific advice or point you in the direction of more resources that could be useful. Good luck!
Hi DoJo, thanks for your great response. I have sorted a little slot of time for us this weekend to sit and chat and go through what is here and there, where he has worked, how long for etc. I don't know if he was self employed in his previous job, because he says it was self employed. However, he received weekly statements from the company he carried out work for with the names and prices if the jobs he completed, the percentage he earned from the price of the job and then a final figure which subtracted a further 20% for tax. I'm not sure what this type of employment would be classed as, there was never a tax code and doesnt even state where the 20% tax reduction went! I thought its better to work backwards, so that we can at least complete tax returns for last year, then take care of older ones as the paper trails get increasingly sloppy and bare boned. Is this the best way to go about it? Or should we attempt to sort them all at once?
Thanks for your help everyone
If he was having tax deducted at source, then that's not self employment so he shouldn't have incurred any penalties from that. Is there any mention of National Insurance? Does he remember if and when he registered with HMRC? If they were taking tax and failing to pay it to HMRC then I would have thought he would have a good case to pursue the company he worked for for outstanding money, and HMRC is clamping down on 'false self employment' at the moment, so they should be able to help.
Sometimes, the best thing you can do is ring HMRC and ask them - I know it sounds like a daunting prospect, but every time I have spoken to them they have been really helpful, pointed out things that could help me and been more than happy to talk me through anything that I didn't understand. They will at least be able to tell you how to go about the next step of sorting everything out, and it's always reassuring to have the official line on these kinds of things, so might make you both feel better about tackling it!
Ah, you are in the black hole that is CIS returns.
Get an accountant.
there is no other way you will get this sorted out.
DoJo - you are mistaken I'm afraid in that you can be self-employed and have tax deducted at source. It is probably CIS as Talkinpeace says. I assume OP that he is some sort of builder/ plumber/ carpenter/similar tradesman?
As Talkinpeace says you really do need an accountant to get his stuff straightened out. A qualified accountant will know what they are doing and sort it out in a lot less time than you and hopefully with less penalties than you too.
They will also know the right things to set off against the income so that you pay as little tax as possible.
Sorry - I meant that if he was being taxed then it's not 'traditional' self employment where you incur a tax bill at the end of the financial year. So he shouldn't have an outstanding bill for tax if that has been paid by an employer, just for any penalties for failing to file etc. I wasn't clear, as I'm not really sure what the OP's partner's status is, so trying to simplify things too much (for myself as much as anything!). However, it is worth checking whether he was in a false self employment situation as that is also quite common in some industries.
Apologies OP - hope I haven't confused the issue any further, but it still might be worth calling HMRC for advice as that will be free in the first instance, and will help you work out what other help you might need!
But CIS is the follow on from SC60 and 714 : the freelance trades are the oldest recognised form of self employment (hence the archaic forms)
and CIS moved to net payment over ten years ago while still being UTTERLY self employment.
I am an accountant with 20 years plus of experience of sorting out the mess that subbies get themselves into.
You NEED an accountant and fat : their fees will be offset by the fines they can wangle you out of.
Make the call.
DoJo - it is still possible to end up with a a tax bill even if all your income has CIS 20% deducted at source. Ok, only if your earnings are higher but it is possible. The CIS is effectively a payment on account. Many of the lower earners get a refund and potentially a sizeable one at that.
It is however a complicated situation for OP to sort out.
Like talkinpeace, I too am an accountant with 20 years experience, most of it in accountancy practice. You really need someone to help you sort this. If it is simple it won't be too expensive and the costs will be more than offset by savings in time, emotion and more than likely tax.
I appreciate that - I took the OP at her word that her partner was PAYE, perhaps that was a mistake on my part and he is CIS. However, now there are more knowledgeable people on here I will bow out.
He was being deducted 20% tax before he received pay in the job he worked from May '13 until 30th August '13. He was only earning an average of about £200 per week (before tax) He was essentially cut loose because the company manager's son came back from a summer away and needed a job. My partner was then unemployed until October, broke his ankle and was laid off, and didn't find work again until Feb '14 which is PAYE. Sorry for not being clear, but thanks for all the advice. I am looking into an accountant as we found a few unopened HMRC letters that actually date back as far as 2008! He has never really been one to take care of these matters (stupidly) but we are working on a future together and don't wamt this mess looming over us forever.
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