Huge tax bill

[lolacoxox]

In need of some advice please - my boyfriend has his own company and has had it for a few years. He works alone so no team. He has never payed tax and has always said he would sort it so believed him and stupidly asked no questions.

We own a house together and have a child on the way.

He has now got an accountant to sort his taxes out for him and it turns out he owns £40,000!!!

I am beside myself with worry. Cannot pay this and don't know our options. I'm so mad. Any advice welcome please.

If he doesn't have the €40k to hand, it isn't really sustainable as it doesn't generate enough profit to cover all debt, which includes taxes.

Not necessarily, he could easily have spent the 40k.

You say he is your boyfriend, not husband, so the debt is entirely his.

Protect your assets.

@Crackednuts of course a £40k tax bill is entirely possible, whether just for this year or previous years too and fines.

My self assessment tax bill for just this year is that

That is such a useless piece of advice, you deserve an award.

However he's managed to get into this mess is something you need to deal with but it's happened and won't go away so you or should I say he needs to man up and deal with it head on because HMRC are going to want there money one way or another. My advice would be that the best outcome will be from him immediately being honest with HMRC that he has messed up big time and knows he has to pay and hopefuly they will look at his finances and work out a way to pay. It's in HMRC interest to work out a way so they can get the money.

Have you seen his accounts? Why would a business not owe that amount, what an odd post

You must already know that as you know his tax bill can't possibly be correct

Thank you everyone for such helpful advice. Will make sure he calls them first thing and hope they can support him with a plan to repay. Really appreciate all the comments, thank you.

This is hilarious, please do not offer tax advise to anyone else. Of course he could owe that much tax. Some of my clients owe double that for just 1 year.

HMRC offer a payment plan but its affordability based and generally only over 12 months but you can speak to them and get it looked at on an individual basis.

HMRC is one bill you don’t want to get into arrears with- I’ve had a similar situation with my husband and we (he) had to get a loan to pay his off as the monthly payments were more affordable that way.

could you remortgage to release some equity to pay it? It’s not ideal but it’s an option.

He needs a tax accountants advice. Citizens advice can only help so far, but he can't avoid dealing with this any longer. They will normally consider payment plans, obviously but it'll have charges applied so £40k will be more than £40k.

Not wanting to maake this worse, but not paying tax may be a criminal offence - hoping HMRC show some mercy on him. Frankly he's an idiot who shouldn't be selfish employed!

If he's not making any money why the tax bill?

has he actually filled in a return or has HMRC sent an estimated demand because he hasnt completed a return?

Is this a corporation tax bill or his personal tax bill as that makes quite a difference to next steps.

Thinking about it has HMRC sent a bill or has the accountant worked out what he owes?

Also how much exactly is he earning? If he's got to pay £40000 in tax over say 4 years earnings thats quite a lot of income involved

Yes, I wouldn’t start chatting with HMRC about payment plans and liquidating savings or personal assets until this has been established.

Does your partner have an office at home when he does admin. Does he use a phone to call customers. Does he use electricity while he is doing work from home. Does he have the heating on while he is working at home. All these little add ons does help to bring down the tax bill. I can privately DM you a good accountant who will take all that into consideration while filing his tax return.

Your rent or mortgage can be included in the return he has to do admin somewhere.

Has he included any of the above in his tax return?

Not really, a business with less than £40k as a buffer or at least half it is really tight in terms of cashflow.

There's no contingency to cover a myriad of potential issues - transport breakdown- replacement vehicle, cost increases, interest rate increases, issues like covid or business disruption, redundancy, bad debts, late payment, need to change suppliers, restricted credit terms etc.

You can't deduct your mortgage from your company tax bill, you're making some strange posts on this thread

You can claim a small amount if you do work at home and as that's pretty basic I think we can safely assume it's already been done by the accountant

I read that that as the pp meaning he'd personally taken the money out and spent it rather than business spending

That would be easy over a number of years

They may well not just take his word for it, they might want to look into it and check the amounts, but he can most likely make a payment on account to at least stop any more interest.

the more co-operative he is, the less any potential fine will be

if it is company debt - take specialist advice.

I think so too. This is really important.

There is no getting away from it - the money has to be paid one way or another, either by him personally or from the business assets. There is also the question of VAT. If the tax bill is that high, then chances are the business should be registered for VAT as well, and that is a whole other can of horrible worms to open. But the accountant will advise on that.

HMRC has huge powers, he can't get out of this.

It was mentioned to me but I didn't get into how much. He may not have added it. It's a lot of money I am in shock.

Are you the OP using two accounts? I don't understand why you would be in shock