HMRC Regulation 80 Determination - WTF!

[Whichwhatnow]

Back in 2018 I worked for a grand total of two weeks (part time) as a self employed consultant via a personal service company. Received fees of around £3k. I'm rubbish with tax etc so got an accountant to sort it all for me - so far as I was aware everything was sorted, all VAT and corporation tax paid etc. Ever since I have worked as a PAYE employee - self employment was not for me!

Now I have just received a letter from HMRC stating that they believe I have underpaid income tax and NI to my employees(?) through my ltd company, and now owe them £112,000! Payable immediately! Logically I know this is a mistake of some sort, but it's still a scary letter to open - and how could they mess up quite so badly?? Has anyone else had experience of this?

Call them, they will realise it's an error.

Phone HMRC

Phone the accountant

They are doing a massive exercise at the moment and looks like something has been flagged but all fixable. They are helpful most of the time.

Thanks - I have done. HMRC are usually really helpful but not in this instance - the adviser just kept repeating that I needed to talk to my accountant (I don't have one and am loath to pay for advice on this) and follow the appeals process. Could just have done without this at this time of year 😕

If you registered for and paid VAT and Corp tax then you were set up as a company and you yourself the employee - which seems like a hell of a lot of faff for the sake of a couple of weeks work worth only £3k.

did the accountant then close down the company? Properly? if not then there will be annual confirmation statements and quarterly returns all due, you need to speak with the accountant you used and find out what they have and haven't done.

It says in your post you did use an accountant? It’s probably easiest to talk to them to understand what has gone wrong.

If it’s their error they won’t bill you for it. If it’s an HMRC error they should be able to confirm that so you deal with it.

Just call again (and again) in the hope of getting an advisor who has some understanding. It sounds like the one you spoke to hasn't got a clue (HMRC have lots of staff who really havn't a clue!). They also have lots of staff who do know what they're talking about and can probably deal with their obvious error over the phone!

It was meant to be longer than that - I ended up having to leave the role due to health issues and then just couldn't be bothered with the hassle of it so went back to PAYE.

@Eastereggs1 I did use an accountant but only as a one off years ago. I guess I'll try to appeal myself first and then get them involved if necessary...

Thanks all

even still, you created a company - there’s rules and requirements when this Happens, and as the director those requirements are your responsibility. You weren’t self employed - you were the employee of the ltd company.

by going back to a PAYE role that doesn’t automatically close down the ltd company which you set up, if you search companies house you’ll be able to see if it was dissolved correctly.

Reg 80 claims usually arise because the service companies that people work through have avoided paying tax and NIC's and HMRC have the power to pursue the worker.

Appeal the regulation 80 immediately following the instructions given in the letter.
Your grounds for appeal will be what you've stated here plus any other relevant info. Also add in that you would appreciate a phone call asap to discuss as you feel an error has been made.

Is the letter addressed to you personally, or your company name?

Can you see if your company still exists on Companies House (CH Link)?

In any event, do follow Cataline's advice - write a letter (send recorded) appealing the regulation 80 and set out everything you've said here.

Word of warning though - don't expect a quick response. HMRC are very, very, VERY slow in responding

In the meantime, it might also be worth following up with the old accountant to confirm that they closed the company and PAYE scheme appropriately.

HMRC do make mistakes, so try not to panic.

Are you sure you haven't received any previous letters from HMRC addressed to the Limited Company that was, albeit for such a very short period, set up??

Because this kind of estimated bill is usually generated when end of year Returns (P35) have not been made, nor any payments of tax and NIC deducted from employee wages.

Could it be that the Ltd company was set up with HMRC but not closed down properly? Because this action taken suggests they assume you've been running the business since 2018........and nothing has been submitted to them so this Reg 80 has been generated to force your hand as it were.

Right, I've checked and the ltd company is still active. Ffs. I sent off the forms etc to close it down but due to some serious health issues/long term hospitalisation at the time basically forgot to follow up to check. So I assume they are basing this figure on the assumption that I have continued to charge at the same rate as those two weeks in early 2018 to date. Argh. I absolutely haven't had any letters from them since the time the accountant was sorting it all out for me though, so hopefully this is easily fixable. Will send the appeal now and follow up with a call if needed.

Thanks all for your help.

Yes, this is an easy fix. Happened a lot when I worked for HMRC, a Reg 80 usually got a response one way or another!

Odd that you had no previous letters but this one, a Reg 80 is a last resort (or it was in my day, but that's going back 20 years)

Is the company's registered office at your address or your old accountant's? Or somewhere else?

It's unusual that Companies House haven't just struck it off for non-filing of accounts and Confirmation Statements, but if HMRC believe you owe them money this might have held it up.

Word of warning, if you apply to have it struck off now and the HMRC letter is in the company's name, they'll probably object to the strike off request.

I called Companies House just now and there is an objection filed, which is why it hasn't been closed down. They couldn't tell me who had raised the objection over the phone so I've emailed. Sighhhh... so much hassle for two weeks of work! Never again! 😅

Yeah, that'll be HMRC. Don't expect a fast response from Companies House either - them and HMRC are as bad as each other at the moment!

Go ahead with the appeals process then get the company struck off after.