Advice needed not registered self employed, not paid tax etc. App.5 yrs. 8k - 12k

[Ted Riot]

Need advice... my girlfriend hasnt registered self employed not paid tax or NI for about 5 yrs.. What can be done and what are the reprecussions?? Shes thinking about working in something else but whats going to happen and can anything be done to side step anything that does??

[robindunne]

Tax evasion is a very serious matter. Penalties are up to 100% of the tax owed, so work out how much tax and NI she should have paid in the five years and double it.

[The Pines]

That's a LOOOONG time to not have registered.

When I first went self-employed it took me about 5 months to getting around to telling HMRC. I think the limit at that time was 90 days, after which a small fine was added. I paid the fine and all has been well ever since. This was over 7 years ago.

Now then.

A serious matter, and one which no accountant will endorse, but something that is possible, and might result in a lower fine, but...

Is there any way in which your GF could say to HMRC that she actually started two months ago??? How has been been getting paid? If it's cash, then HMRC have no way of telling exactly when your GF started.

Any other payment method of course leaves a trail which they can investigate (Cheque, BACS, etc), so if she has been receiving payment by any other method than cash, she needs to register immediately and pony up the oustanding taxes, plus fines. If she also claims any form of benefit now, or at any time in the last 5 years, there will also be repercussions in the form of repaying benefits.

If she has been taking the mickey with benefit payments aswell as undeclared earnings she is possibly looking at a suspended prison sentence. Note that I said 'suspended', I doubt she'll be put in the slammer for it, but the seriousness of her situation should not be overlooked.

[Stretchy]

Obviously taking Pines advice will greatly increase her chance of prison.

I'm sure if the OP wanted advice like that he wouldn't have come into the accounts and finance forum, but would have consulted his local 'man in pub expert'.

[The Pines]

Obviously taking Pines advice will greatly increase her chance of prison.

I'm sure if the OP wanted advice like that he wouldn't have come into the accounts and finance forum, but would have consulted his local 'man in pub expert'.

Would that also include the advice where I said...

"she needs to register immediately and pony up the outstanding taxes, plus fines."

(I've put it in bold, and increased the text size, so that you can read it)

The other 'advice', which I clearly stated as something that no-one will endorse, but is possible, is that if she has received payment in cash, then the situation can be manipulated into a less-serious situation.

Regardless, if she has been self-employed for 5 years, and IF she has been claiming any tax credits or benefits then there would be quite serious penalties anyway. I assume she hasn't been squirreling away a % of her income for the taxman, and wouldn't have the cash available right now to pay 5 years of income tax, plus NI contributions, plus fines.


P.S. I've gotten far more valuable business lessons from a 'man in a pub' (who is able to talk freely and frankly about Tax and the Tax Man) than I ever have from anonymous posters on an internet forum. Just pick your 'man in a pub' carefully.

[Tom McClelland]

Is the 8-12k the annual pay or the total for the 5 years?

[Gill]

Seriously, bell has gone, back to lessons now.....

Come on, chap has asked for help, so help - let us not point score, not until Monday at least.....

Gill

[Ted Riot]

Thanks for the feedback...the situation is that shes going to have to face the fact and pay excess taxes and NI... shes hasn't been claiming benefits, shes has student loans to pay.... if the money isn't available what are her options and how would it effect her.
If she went to prison how long?
Or she registered for say last 2 years, and maybe been living abroad for a couple maybe...
It's not exactly ethical but shes a hard working girl and things haven't gone her way, stupid not to pay taxes obviously but i sure plenty of people out there have done worse!!

[The Pines]

Thanks for the feedback...the situation is that shes going to have to face the fact and pay excess taxes and NI... shes hasn't been claiming benefits, shes has student loans to pay.... if the money isn't available what are her options and how would it effect her.
If she went to prison how long?
Or she registered for say last 2 years, and maybe been living abroad for a couple maybe...
It's not exactly ethical but shes a hard working girl and things haven't gone her way, stupid not to pay taxes obviously but i sure plenty of people out there have done worse!!


You should both sit down together and spend the next day or two looking at the different scenarios under which she needs to make contact with HMRC and register her earnings. You need to devise a plan of action BEFORE you contact HMRC. Yes, it'll take a day or two, but in the grand context of over five years of having not registered, those two days are almost an irrelevance.

Firstly - she will NOT be given a custodial sentence. If she has been self employed for 5 years, and this is her first offence, they will be lenient and fine her the appropriate amount of tax, plus interest, plus fines for not registering. A suspended sentence seems to be the option that most courts take these days. Again, I am assuming that this is her first offence.

The difficulty is if she has claimed either Tax Credits or Benefits in the last five years, whilst also working. I'm sure you're aware of the media and Gov't current hot topic - benefit 'scroungers'. She needs to be absolutely sure that she hasn't received any benefits or tax credits at her declared income levels, which are, of course, not 'correct', since she has been earning for the last 5 years.

If she registers with HMRC now as having been self-employed for the last 5 years there will be considerable demands for her to pay back what's owed. Remember that interest will accrue on the outstanding amounts. They will NOT be interested in any hardship that comes to your GF as a result of not having paid tax and NI on her income for the last 5 years. In the immortal words of Ray Liotta, "F**k you, pay me".

The two of you need to sit down together and work out exactly what she has earned in the last 5 years, work out the total tax and NI, and then you can pretty much double that figure, to include fines and interest.

[E Storey]

To register as self employed all you have to do is ring HMRC or fill in a form.

If she was earning less than around £5500 per year she would not have had to pay tax anyway. Technically she could have also been exempted from National Insurance. So, depending on if the £8-12k was annual or over the whole 5 years it may not be as bad as it looks.

Was this a job she was doing to support herself through uni?

[Ted Riot]

Its about 8 -12K per year so shes owes roughly 10K plus national insurance...
What if she registers now and states she has just started self employed now??
Will they be checking the past and if so what will they be checking on...
Need a pain free solution...if she just hasn't got the money what can she do??

[Tom McClelland]

Is it not the case that the 100% fine tends to be only applied in the most egregious cases? The simple act of coming forward with the fullest possible disclosure *before* being investigated tends to mitigate the fine very considerably. Correct me if I'm wrong, professionals...

[Tom McClelland]

Its about 8 -12K per year so shes owes roughly 10K plus national insurance...
What if she registers now and states she has just started self employed now??
Will they be checking the past and if so what will they be checking on...
Need a pain free solution...if she just hasn't got the money what can she do??

While I sympathise with anyone who has allowed a longterm error to creep up on them I do think it is a bit presumptuous to want a "pain free solution" to the problem that £10k tax owed hasn't been paid. If pain-free solutions to that kind of problem were available why would anyone ever pay their taxes?

[MyAccountantOnline]

Need advice... my girlfriend hasnt registered self employed not paid tax or NI for about 5 yrs.. What can be done and what are the reprecussions?? Shes thinking about working in something else but whats going to happen and can anything be done to side step anything that does??

My advice would be to see an accountant asap - your girlfriend will need to make a full disclosure of the income she hasnt yet declared and complete outstanding tax returns. A good accountant will be able to do this for her and then help minimise penalties etc. But do so sooner rather than later.

[OldWelshGuy]

She either pays it or she doesn't, there is no pain free route.

Can she pay? if not then she might well be made bankrupt. If yes, then she draws up a shcedule for repayment.

I find it odd that she could earn 8-10 k a year while studying, but now can't repay?

One thing that is ABSOLUTE is not to try and blag HMRC, if you do then you fall foul and can get into deep water with them.

[MyAccountantOnline]

Another thing to bear in mind is that her actual tax liability may not be as bad as she is anticipating, again an accountant will look at that for her claiming all expenses possible.

[MH1]

Not an expert but based on a similar situation a friend admitted to myself a couple of years ago, my simple advice was to talk to HMRC and be honest, they will eventually investigate and will not care how much it costs.

He approached them and found them very helpful overall, and since he had also not kept any records they estimated a very low figure to bring him back into the fold, but he can now live his life without looking over his shoulder.

I would recommend your friend gets a professional accountant to work with her on a course of action, but being a professional they will obviously tell her to contact HMRC as well.

[DetectiveDenise]

In my opinion she has no other option but to come clean, once any lies start if HMRC pick up on that it will make the whole situation a lot more serious. Total honesty is the least painful route in that in return HMRC will be hopefully be totally honest about the consequences back so she's not worrying about what might happen. She needs to speak to an accountant as soon as possible.
Denise

[elainec100@cheapaccounting]

Full disclosure on this is needed asap.

I would suggest appointing an accountant who has experience of dealing with HMRC in such a situation and how to best handle this situation.

Let's fact it - this will only get worse.

So may I suggest that she no longer buries her head in the sand on this but makes it a priority to sort it out asap.

Bear in mind in all this time she will not be getting credits for pension and other benefits.

[prayer girl]

My friend has worked on the side for lots of different companies since 2001. He has never claimed benefits. He is now sick and unable to work how does he register for benefits without getting into trouble?
HELP!!:eek: