Active discussions

Meet the Other Phone. Only the apps you allow.

Meet the Other Phone.
Only the apps you allow.

Buy now

Please or to access all these features

Talk
Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

Original poster

In Trouble with Tax

26 replies

changedu5ername · 19/08/2018 07:44

Hi,

I known this might be the wrong place for advice, but if anyone's been in the same position, I would appreciate advice.

I have a main job, which earns about £13,000 a year. The money drops significantly during the summer (June - Oct) because the work involves teaching university students (largely online).

I supplement my earnings with some freelance work which brings in approximately £6000 per year. In addition I have a small professional pension of approx £3000 per year.

I submitted a self assessment form for the work I did last year and was advised by HMRC to directly debit £40 pcm to cover the tax from the freelance work (NI is paid on my main employment).

However, due to a family crisis, I missed submitting my self assessment this year.

I have now received an arrears notice for nearly £4000. I am really shocked. I contacted HMRC and explained there is no way i can pay this as a lump sum.

On their advice, I have submitted an income and expenditure form and offered to pay the arrears off over a year. However, this is going to leave me (and my son) extremely financially challenged.

I realise I have made a mistake through not submitting this year's self assessment (I have now done this). However, I cannot believe how much tax I am supposed to owe.

Has anyone else been hit by a huge tax bill and, if so, what did you do?

OP posts:
NaiceAm · 19/08/2018 07:54

Hi I would give the TaxAid helpline a call. taxaid.org.uk/guides/taxpayers. I hope you get it sorted.

Moreisnnogedag · 19/08/2018 08:08

That’s not tax that you owe but also the fine for late payment. It’s £200 I think straight away, then a daily charge and then a further charge when you hit three months behind.

Why did you agree to pay it off over a year? They should have done a financial review and come up with an affordable amount per month.

Speak to them again - I didn’t realise that I had to do a self assessment each year and so was three years behind at one point. I set up a monthly affordable payment.

mamalovebird · 19/08/2018 09:00

The £4000 will be made up of tax owing (plus interest) and late filing penalties.

How late were you? Not filed by 1st Feb = £100, then £10 per day for a max of 90 days (so that's £400 by 1st May if not filed), a further £300 after that etc etc, so it can soon add up. Plus they will charge you interest on the actual tax owing.

You can appeal the penalties. Depending on certain circumstances, the penalties can be waived. Download an SA370 form to appeal.

I'd advise getting an accountant (yes, I am one!) They can file it all for you and will be cheaper than a penalty!!

Original poster
changedu5ername · 19/08/2018 09:07

Hello,

Thank you for the really helpful and prompt replies. I was told that because the arrears were more than £3000, I had to pay this off within a year. The amount I have estimated that the amount that I may pay per month will clear the debt within this time, but I am worried that I may not be able to pay this in 'short' months.

When i informed the manager at HMRC that I would find repayment difficult, she advised me to sell things (I do not own my home and do not drive, so there is little I can sell!) or borrow off friends and family. She also mentioned debt collection, which sort of frightened me.

I know I have arrears, and I fully intend to repay them, but I earn less than an average salary and my income is very insecure, so i thought it was all a bit heavy handed.

OP posts:
Original poster
changedu5ername · 19/08/2018 09:08

Sorry about the confusing sentence. I hope it makes sense.

OP posts:
Ohhdear · 19/08/2018 09:21

You earned 23k, didn’t submit your self assessment and you’re shocked you’ve received a 4K bill? HMRC will have no sympathy, I don’t blame them.

mamalovebird · 19/08/2018 09:25

You need to appeal this first totry and get some of the late filing penalties waived, then depending on the outcome, make an arrangement to pay. They will push for 12 months but you can negotiate a longer term if you use the right terminology in stating your case. You mention a pension.... are you actually a pensioner?
PM me if you want to discuss.

HMRC are a nightmare and you will get different advice depending on who you speak to.

I would also lodge a complaint. To advise you to sell things to pay the bill is ridiculous and not helpful at all.

Don't panic! Dropping the 'debt collection agency' bomb is designed to scare you into paying up.

RandomMess · 19/08/2018 09:30

Tax owed on £9k would be £1,800 so do you have a breakdown of what the £4K is for split into tax owed & fines? I wonder are they also making you pay the most recent tax year in advance of being due because you failed to submit etc?

Have you carried on paying by DD the £40 per month?

I have assumed your salary takes tax free allowance so you need to pay tax on pension and self employed income?

mamalovebird · 19/08/2018 09:40

She didn't earn 23k for which she's not paid the tax on. Her total earnings were £22k.

She got £3k in pension and £6k in supp earnings that she didn't file a return for.

Based on £22k, her total tax bill will be £2100. Presumably, the main job would have had the tax deducted at source.

She had a family crisis. It happens.

The £4k will be made up of tax owing and late filing penalties, which she is entitled to appeal against if she had good reason for not filing on time.

Original poster
changedu5ername · 19/08/2018 09:46

Thank you for the helpful advice. 'OhDear', I payed tax on my salary from my main employment. My self employed earnings are £6,000. I do not expect 'sympathy' from HMRC. I expect to be treated fairly and to be given a reasonable chance to pay off the arrears.

OP posts:
ClashCityRocker · 19/08/2018 10:25

Depending on your family crisis, try appealing on the grounds that you had a reasonable excuse for failing to submit your tax return on time.

A fair chunk of that bill will be penalties for not filing. If your family crisis was such that you had a reasonable excuse, hmrc should cancel the penalties.

It's a crap-shoot at best, though, I'm afraid. Giving the time that has elapsed and the fact that they had to come to you to resolve it you would have to hope for a sympathetic hmrc worker, but it's worth a go.

Original poster
changedu5ername · 19/08/2018 10:44

Thank you again. I will call HMRC tomorrow to inform them that the latest self assessment has now been submitted and I have posted the income and expenditure record. I will pay the outstanding amount, but if it could be extended even just a few months to give me a bit more time, this will be a relief.

OP posts:
CrabbityRabbit · 19/08/2018 12:25

Why should HMRC not suggest selling things? Tax arrears are a priority debt as you can go to prison for non payment.

You will only be able to appeal if you can show exceptional circumstances (family crisis) then show you took steps to file as soon as the crisis ended or lessened.

mamalovebird · 19/08/2018 13:11

@CrabbityRabbit

Because selling things to pay a tax bill should be viewed as a last resort, not a routine way to settle bills. I am assuming it a first offence too.

An agreement can nearly always be arrived at. The amount outstanding may seem a lot to changedu5ername but in my experience, I've never had anyone jailed for owing a few grand in tax, and I'd imagine most of this bill is made up of penalties, which should be waived given the circumstances of non-filing.

Ta1kinpeace · 19/08/2018 13:28

OP
You need to get the return calculated and submitted so that you know exactly what you owe.
While you are at it it, do 17/18 nice and early so that you can get everything tidied up at once.

Pay the actual tax due as fast as you can by weekly payments.
Appeal the penalties in writing
DO NOT haggle with them on the phone. Everything in writing, recorded delivery

Good luck.

Racecardriver · 19/08/2018 13:33

Similar things have happened to us in the past. HMRC are really unreasonable in how they deal with self assessment tax. First are the arrears actually arrears or are they trying to tax you for next year as well (they often do this). Secondly what you do is this:you call them up to set up a payment plan. You stick to the plan for as long as you can. When you can't pay anymore you call them up again to arrange a new payment plan and so on. Sometimes you will get an absolute dick with no common sense on the end of the line so you just give up and call another day until you find a rep with half a brain.

Squamish · 19/08/2018 13:40

I agree that you need to do this in writing. Explain circumstances and appeal asking if they will waive penalties and agree a payment plan

Going forwards I suggest you employ a tax advisor to do do your return

Kazzyhoward · 19/08/2018 17:17

Sometimes you will get an absolute dick with no common sense on the end of the line so you just give up and call another day until you find a rep with half a brain.

As an accountant who's been dealing with HMRC for the last 35 years, I have to agree with this. It's the only way to deal with them. The difference in advice/treatment from different advisors is unbelievable - there's no consistency at all. Some are absolute idiots.

mamalovebird · 19/08/2018 18:44

@Kazzyhoward Agree too! I said the same upthread but a bit more reserved Grin

Ta1kinpeace · 19/08/2018 18:56

Kazzy
now come on, don't mince your words ;-)

OP
I've seen kazzy on threads for many many a year
luffs it when she beats me to the blunt reply

we professional accountants will save you more than we charge you
find one and get them to fight the Revenue for you
we get a bigly amount of pleasure from it

Isleepinahedgefund · 19/08/2018 19:03

HMRC will quite rightly want the money as quickly as they can, and they will not be amenable to £1 per month for 400 years type payment plans like say, a credit card company. They will also require to keep up with your ongoing liabilities aswell, hence why they want it within a year. They also frequently use bankruptcy to get their money back, especially if you have assets.

£40pcm won’t have paid what you owe based on what you said anyway.

Totally agree with what’s been said about calling back and speaking to someone else until you get the one person in the call centre who knows what they’re talking about and will take time to help you (might take a while) - most important is to make sure the amount due is correct (including penalties) and remember they will most likely charge interest on the debt whilst you’re paying it off.

People don’t go to jail for this sort of not paying your tax. That’s for tax evasion, carousel frauds, serious VAT evasion etc.

www.gov.uk/if-you-dont-pay-your-tax-bill

Ta1kinpeace · 19/08/2018 19:11

They also frequently use bankruptcy to get their money back, especially if you have assets.
bollocks
They will also require to keep up with your ongoing liabilities aswell, hence why they want it within a year.
more bollocks

sorry but we tax accountants get much better deals for our clients than internet hypotheses

Isleepinahedgefund · 19/08/2018 19:24

Actually I deal with HMRC debts all the time in my professional capacity, this is not internet hypotheses or bollocks thank you very much. They do use bankruptcy, and they do want you to keep up with ongoing liabilities. Maybe you haven’t experienced it with your clients and can get them a better deal, but those who do not have an aggressive accountant to act on their behalf might be treated very differently by HMRC.

Ta1kinpeace · 19/08/2018 19:28

They do use bankruptcy, and they do want you to keep up with ongoing liabilities.
that say they do
but I've got a corker of a case where my client owes them £11000 and they do not DARE take him to court as I've already alerted the Newspapers Grin
their systems are so poor its unreal

ClashCityRocker · 19/08/2018 19:44

Aye, I'm with TiP on this one.

No need for scare stories for the Op. But I would recommend an accountant...to save you the bother in future years, and get involved in the negotiations and appeal with hmrc.