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Money matters

Inland Revenue - at wit's end. Is there honestly NOTHING we can do?

40 replies

twoisenoughmum · 22/03/2007 15:01

DH and I are desperately worried and stressed by an unexpected tax bill. We might have to sell our house! Having checked with DH's accountant and a kindly Mumsnetter and Taxaid, it seems that although the method the Revenue have used to calculate DH's tax is grossly unfair it is just the way they always do it in our circumstances, and so now we are being chased for payment of a considerable sum which we had absolutely no idea we owed.

What would you do if you felt you were being forced to pay money which you truly believe you don't owe, but you have to do it just because the revenue is an impervious monolith and the law is on their side.

Would you just pay up and suffer the consequences? (Like perhaps selling your house).

Or would you go down every route of appeal you could think of?

TIA.

OP posts:
jura · 27/03/2007 23:26

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Soapbox · 27/03/2007 23:30

I think you are right Jura - but only because I am still trying to get my head round my own tax position.

I was taxed on the actual profits to 6 april 2006, and will be taxed on those profits again this year afaik!

jura · 27/03/2007 23:39

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Soapbox · 28/03/2007 00:02

LOL - I think tax is my professional 'blind spot', especially my own

jura · 28/03/2007 00:10

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Message withdrawn at poster's request.

Eddas · 28/03/2007 08:16

Ok, now think we're talking cross purposes here, i was only referring to overlap relief, but this is how it works, ready???!!!If i use actual dates it should make more sense

Ok, you choose your year end date. It can be 12 months after the start date or you can pick it. So if you start your business on 01/11/06 and you choose a year end date of 31 March, your first accounts are will be for the short period 1/11/06 to 31/03/07. This is what will go on your tax return form for the year 2006/07. The you will make up accounts for each year after that, but the first accounting date is a period not a year. But, if you choose a year end date 12 months after the start date so 31 October, you will do accounts for a year. What goes on the 2006/07 tax return is a proportion of the year ended 31 October 2007 accounts(ie, 5/12 of the year ended 31 October 2007). Then on the 2007/08 return the year ended 31 October 2007 will be included. Therefore you have used 5/12 twice, creating overlap relief. When the business ceases that 5/12 will be deducted from the final accounting year or period.

So yes you do use prior year basis. The accounts that go onto the return are the accounting year which ends in the tax year. But this is not the case in the first year if you do not have an accounting year of 31 March or 5 April.

Does that make any sense and help at all ???!!

Eddas · 28/03/2007 08:24

And IMO those bloody HMRC helpsheets only serve to complicate matters when they do not need to. It is no wonder that people find the tax system too much to deal with. HMRC need to explain things much more clearly. I have tried to read that sheet but it is very strangely worded. I am sure i'm right with my explanation though i can see why that sheet makes you question me.

I hope i'm right or lots of people will be paying the wrong tax!!!!!!

Eddas · 28/03/2007 08:28

Last post

Are you both chartered accountants? I don't think I should be trying to argue if you are? Me not being qulified.

Grrrr · 28/03/2007 08:30

twoisenough,

in your first post you said you'd saved £8,000 to pay the tax, did that get spent ?

Blessed2 · 07/04/2007 17:26

If you join the WHICH? legal services they might be able to help you. I think asking them is worth a try.

LaDiDaDi · 07/04/2007 17:40

I've no tax advice to offer you but I just wanted to say that I would think very hard aboit selling your house to pay a £7k bill.Consider the buying and selling costs associated with moving (solicitors, estate agents, stamp duty, searches, mortgage redemption, survey, new mortgage fees, removals) and you might end up spending £7K on that and loose the home you have now!

Judy1234 · 07/04/2007 18:24

Just briefly read this. I think the gist of it is that you paid less tax earlier so when you come to close the self employed business in the same year you're earning the employed income you suffer because you benefited earlier. My father retired last year and was self employed. he of course got a tax refund as he had no other earned income to add on to calculate what he earned in that last year of trading. But it is more complicated than I understand also I think you said he's not closing it this year either so it would presumably be like when I had employed income and self employed income.

Is it still the case that self employed income is taxed (unlike employed income) on the basis of thee preceding year's profits or did they change that?

PeachyChocolateEClair · 07/04/2007 18:52

OK I know nothing about tax, but I DID work for Vat for a while.

So what I woulda dd is that we were always at the number of mistakes made in calculation, and you'd be amazed how many apepals are successful or more likely, settled before hand as the Officers got told off if they loat an appeal (the memorable story of the VAT offices biggest case failing- against Argos iirc regarding gioft vouchers, Vat office tried to charge VAT on them- well we were all 100 of us sitting in the staff room preapring to watch an inter office staff briefing when the news item we were watching cut staright to the story fab!)

lailasmum · 08/06/2007 12:54

We had a similar problem to opening post. Switched from self employed to paye. Suddenly got a bill from them for a huge amount. They said no payment plan, pay NOW , they were harassing us for the money. We got a loan to cover it and consolidated something else. Then a year later got a cheque from them saying they were wrong, here is your money back. With interest and the a penalty for paying off the loan early we are worse off if we pay it off so are lumbered with loan. Live on next to nothing anyway. which is frustrating enough.

BCLass · 16/06/2007 16:51

Prior year basis ceased many years ago - now self employed are taxed on current year basis.

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