To be angry that my uncle hasn't paid Tax or NI for over 30 years!

[Tensixtysix]

My uncle has recently fallen ill and as his only relative it seems to have fallen on me to take care of him.
He needs to go into a nursing home and at least he has his own home, so that will have to be sold.
But he then drops the bombshell that it's worth would end up all going to HMRC because since the early 80s, he's been self employed as a painter/decorator and never applied for it.
He hardly ever went to the GP or hospitals.
But now in his 80s, he needs help and now THIS!
He's doomed isn't he?

If he has nothing left then the local authority will have to help him. Doesn't he have a state pension?

He doesn't even have a pension and has been living very frugally and never has the heating on. What a mess!

He had savings, but his wife died over 10 years ago and he then found out that she had cleared him out of all his savings! 40K!

I'd be asking how he got away with it!

Was he 'cash in hand' all those years? If so, how did he pay his bills that require money going into a bank account to pay them?

Personally, I'd want to look at his financial records and work it all out for myself.

Do you have power of attorney over your uncle? If you don't, I'd advise getting it as soon as possible.

Paid it in as cash. Tax used to be high back in the 80s and it seems the longer it went on, the less he wanted to declare anything.
He used savings accounts, not a bank account.

Am I understanding this correctly? Your uncle never registered as self-employed. He earned money and was paid cash-in-hand so avoided paying tax. He hasn't paid NI contributions and therefore doesn't have a pension.
It will be discovered because he now needs to go into a care home and they will wonder why he doesn't receive State Pension.

No-one will be able to prove what his cash income was over the years so I suspect HMRC would find it difficult to prove a case against him. (At least they wouldn't be able to prove amounts involved) In view of this plus his age and health state, HMRC would possibly not bother to prosecute).

If I were you I would help him put his house up for sale. Help him open a bank account if he doesn't have one and pay costs of his care out if it. Deal with the authorities if and when they decide to get involved.

Anger won't help you in this situation. He may be feeling quite scared now that he is in fragile health. He made a very bad choice of how to live without paying his dues. His fear now is probably very hard to live with.

I'm pretty sure HMRC can only claim back for six years of undeclared tax. So it's unlikely they can claw back the value of his house.

But YANBU to be angry with him for not paying taxes for all those years. I don't see how people can live with themselves allowing everyone else to pay for their services. I once spoke to an older Big Issue seller who was formerly a drug dealer who'd never paid tax in his life moaning about the inadequacies of the NHS and putting it down to foreigners coming over here etc, etc.

And I don't think he'll have enough NI stamp to get a full pension, so the costs of the care home will eat up the equity in the house fairly quickly.

@zingally
"Do you have power of attorney over your uncle? If you don't, I'd advise getting it as soon as possible."
Doesn't an LPA only apply if you become non compos mentis? If OP's uncle has his mental faculties then I don't believe they will be able to become his attorney.

You need to set up a POA whilst a person is compos mentis @Idontwanttotalk but it wont be triggered until (or if) the person actually loses capacity. So yes OP should fo this now if her uncle is expecting her to act for him in the future.

YANBU, but try to do what Idontwanttotalk suggested and leave the anger here, if possible.

"Doesn't an LPA only apply if you become non compos mentis? If OP's uncle has his mental faculties then I don't believe they will be able to become his attorney."

That is why she needs to get it done now, BEFORE he loses his mental faculties. It's really easy to do online but if you don't have one dealing with all his stuff will be a nightmare

What's done is done, no point in being angry. I'd start by helping him to apply for a state pension and any other benefits he might qualify for, gather as much information about his finances as possible. HMRC might investigate but if he has no money now there's not a lot they can do.

I'd also, with his permission, speak to adult social services as he's going to need an assessment of his care needs and his funding needs.

If he owns his house and needs to go into care rather than have carers at home then it will need to be sold. Maybe he'd like to start by having it valued.

@Carthage
"I'm pretty sure HMRC can only claim back for six years of undeclared tax. So it's unlikely they can claw back the value of his house."
For 'Refunds and Discovery Assessment' HMRC's time limits are:
Normally - 4 years.
Careless behaviour - 6 years.
Deliberate behaviour - 20 years.

This is in respect of CGT, Corporation tax, IncomeTax, Paye and Vat.

I just checked this only because there was something in the news the other day where they went back to 1999 and I was surprised as I thought it was 6 years too.

@ Windygate
"I'd start by helping him to apply for a state pension and any other benefits he might qualify for"
He will not qualify for State Pension or benefits if he didn't pay NI or tax for 30 years.

Doing this will just trigger an immediate investigation into his financial misbehviour.

I don't agree with people cheating the system but, at his age and state of health, I wouldn't bring it to the attention of the authorities unnecessarily. If they find out then deal with it then. Let him use his house to pay for the care he needs.

I think for financial POA it can kick in whenever you want if the person agrees (not sure about health & welfare). It was the old type that didn't kick in until needed.
Double check though, I might be talking nonsense!

Genuine question, will the state just leave him in the street, or will the tax payer not take up the cost and he will still get a place in the nursing home he needs?

Anyone can access NHS and care in this country, doesn't matter if they paid tax or not?

He's a disgrace, but there's nothing you can do about that. Talk to CAB to see what needs to be done.

If he's not eligible for a state pension then he should get pension credit which will top it up to the value of the State Pension.I think he would also be eligible for Attendance Allowance.
I agree with the PP who said get adult social care involved. They will be able to work all this out for you.
I think you can earn a small amount like 11K per year without paying tax as a self employed person anyway. I don't think HMRC will be that bothered personally. All he needs to say was he earned below the threshold.

@anyoneseenmykeys,The house will be sold if he needs a residential place so his care will be paid for out of this.

Will the income from the sale of his home cover 3 years worth of care home fees? I ask as when my FIL went into a home recently the home only asked to sign a document to say he has sufficient to cover this. They didn't want to see any supporting documents. He also got the lower care component through SW without showing any document either.

Genuine question, will the state just leave him in the street, or will the tax payer not take up the cost and he will still get a place in the nursing home he needs?

He will be placed in a nursing home, not necessarily the one he needs or wants, or offered support at home. Whichever is the cheapest option that meets (what they consider to be) his medical needs.

we've just done MIL's Power of attorney. Healthcare kicks in when they lose mental capacity. Financial you can choose whether it starts as soon as the POA is registered, or when they lose mental capacity. They can still choose to do some or all of the financial stuff if they wish, or ask for the attoney to speak on their behalf.

so yes, if he wants you to speak for him / try to sort out this unholy mess, you should take a look at doing at least the financial POA, though may as well do both, asap

I'm pretty sure HMRC can only claim back for six years of undeclared tax. So it's unlikely they can claw back the value of his house.

Tax debts (and debts to the state in general) aren't the same as debts between two private entities and aren't automatically unrecoverable after a certain period.

Especially if there's deception or fraud involved.

In theory they can go back forever, although it's usually no more than 20 years. But if there's evidence the fraud goes back further (especially if it's still ongoing) they can go back to the year dot.

They can also produce an assessment, and if you haven't got the documentation to refute it - bad luck. You don't get to take advantage of your own fraud.