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Tax & General Accounting Advice/Help

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psmith53

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Jan 17, 2012
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Hi,

To put it bluntly, my taxes and accounting are a shambles. I started out self-employed a few years ago and set out myself to do my own book keeping and accounting, ended up not doing it and although I know I needed to sort everything I keep putting it off (mostly due to worrying).

To give a rough summary, last year was the first year I had to make a payment on taxes (which I estimate to be less than £1000). I made the payment I thought was right, but filed no tax return as I hadn't got on top of my accounting as I have mentioned.

Again, this year, I'm due to file a tax return and obviously pay (I would estimate, very roughly, between £3000-£4000). I have nothing set up or recorded to do the tax return and have no funds to pay the tax. Although things are bad now, I know they will continue to get much worse so I need to sort this out quickly. I think I will also be due to pay fines etc. on top of what is owed.

If anyone could give me any advice on the steps I should take to moving forward and getting this resolved or any help, thoughts or info at all would be great.

Thanks,
psmith53
 
Hello there

I have recently picked up a client who is in a similar (but worse) position to you. He has not filed returns since 07/08 and has paid minimal amounts of tax.

The first step we took was to quantify the tax at stake - i.e. prepare the accounts for the years that are outstanding to get a picture of exactly how much tax is owed for each year.

Armed with this information, you can then take a view on how to approach HMRC. If you have paid what you think you owe for 2009/10, and your only liablity is £3,000-£4,000 for 2010/11 then you may be sucessful in asking HMRC for a time to pay arrangement and hopefully will be able to spread the payment over a number of months. This will give you the opportunity to trade out of your difficulty.

How long this will take depends on what state your records are in, and how comfortable you are with book-keeping / accounts. If you can afford it, it may be worth appointing an accountant or bookkeeper to help you out with this. An accountant may even be able to help you reduce the tax liabilities.

Currently you will not face any penalties, however if you do not file your 2010/11 tax return on time, or pay your tax then you will start accruing penalties and interest.

Hope this is of some help.
 
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Hi

I read this post at 5am whilst feeding my son but didn't have the energy to reply!

While it would be foolish to say not to worry, please know that you are far from alone. As above, this is quite a regular occurrence, at least you are now taking steps to put things right...hopefully! ;) I myself have taken on 3 different clients over the past 4 weeks in an even worse position, one of which has been given a predetermined tax bill inc penalties etc of over £29k!

At this point, I suggest knowing a bit more about the business and your record keeping would be helpful. What was the level of turnover, how many transactions per month, was everything done via a business bank account i.e all in one place, does the business have any assets, what records have you kept & how? Let's start building a picture and see if we can't save you another penalty that will be looming on the 31st as I'm pretty sure you'll already owe £200+ for 09/10.
 
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Yes, the tax man will catch up with you and it certainly pays to keep this up to date.

Firstly find yourself an accountant, you'll need one to do your tax returns and a good one will help you through other areas you need to get right. If you got your tax retrun wrong then I think you need to have a general health check on everything, PAYE, dividend payments etc as this will all catch up with you.

Secondly get your book keeping straight. The simple process of recording everything right will give you the ability to do most of this yourself and at the least keep a good record when things might not go to plan.

I know Solar accounts has been mentioned on this forum. Its very good and inexpensive too.
 
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I would urge anyone who is behind with tax and accounts to get up to date ASAP.

HMRC have changed the fines this year for late self assessments ...

Penalties for missing the tax return deadline Length of delay
Penalty you will have to pay

1 day late - A penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.

3 months late - £10 for each following day - up to a 90 day maximum of £900. This is as well as the fixed penalty above.

6 months late - £300 or 5% of the tax due, whichever is the higher. This is as well as the penalties above.

12 months late £300 or 5% of the tax due, whichever is the higher.

In serious cases you may be asked to pay up to 100% of the tax due instead.

These are as well as the penalties above.here for more info:

http://www.hmrc.gov.uk/sa/deadlines-penalties.htm#3

Many a time a client comes to us with several years outstanding.

Our approach is to get the accounts up to date and then 'go into bat' with HMRC on penalties / fines etc if any due and time to pay if needed.

Don't bury your head in the sand - this can all be sorted out but it won't go away and does need to be addressed. Doing so will get rid of the worry and stress that is it causing.

Several of our accountants work on this type of case - happy to help if needed.

Good luck
 
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psmith53 said:
Hi,



last year was the first year I had to make a payment on taxes (which I estimate to be less than £1000). I made the payment I thought was right, but filed no tax return as I hadn't got on top of my accounting as I have mentioned.


Thanks,
psmith53
Click to expand...

taxonomy said:
Currently you will not face any penalties, however if you do not file your 2010/11 tax return on time, or pay your tax then you will start accruing penalties and interest.

.
Click to expand...

Query - if the the 2009 / 2010 self assessment is still outstanding there is a fine due for this.
 
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There's no penalty if the tax is paid, but the OP said that he'd estimated the tax payment without actually having any accounts. There is at least a possibility that the payment is too low and both the £100 penalties will apply, plus the surcharges for failure to pay tax on time.

Of course he may have estimated his tax correctly but the number of my clients who overestimate their earnings and tax bill can be counted on the fingers of one foot!

So the answer is that there may be penalties due for 2009-10, but there may not.
 
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taxonomy said:
That's right but he has made a payment for what he thinks is the correct amount of tax
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tee hee that is taking the system of self assessment to it's nth degree.

I thunk my tax is £x so that's what I'll pay :p:p:p;)

Love it ;)

I should think (hope) that we could both agree that we don't know if any fines, penalties, interest would be due as we have no idea if the amount actually paid = amount of tax due.

I doubt if the OP even knows this :p:eek:
 
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OP please dont be put off by the responses.

A good accountant can easily sort this out for you and let you know what penalties are due if any and what tax is due.

Hope all goes well for you:)
 
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Thanks everyone so far for the swift and helpful replies. I'm not put off with the replies so far, don't worry, it was more a problem of me not being clear in my original post.

To clear things up, I haven't yet filed any Tax Return. Also, I wouldn't trust that my estimation was correct at all - so let's assume it was incorrect (to be safe, let's assume it was under what was actually due). With taking this into account, are any of you able to give me a rough idea about what fines/penalties will have accumulated by now?

To be completely honest, I wouldn't trust myself to get this all sorted out myself so I'd be looking for a bit of help with it. Obviously it's hard to give an exact number (due to my vague post and varying rates) but could any of you give me a very rough idea of what the cost would be to get the help of an accountant to set this straight? I'm just trying to build up and idea of how much money I'll need to finally be in the green.

Like I said, thanks very much for all the responses so far - they have eased a little bit of stress and have been very helpful so far.

Thanks.
 
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Very hard to say. Could you answer any of the following from my original post:

'What was the level of turnover, how many transactions per month, was everything done via a business bank account i.e all in one place, does the business have any assets, what records have you kept & how?'

Your penalties will be at £200 I believe for late filing.
 
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The fines etc for 2009 / 2010 are here ..

http://www.hmrc.gov.uk/sa/late-return-pens.htm

As you can see they depend on the amount of tax due - the unknown factor :-)

At the mo - no fines etc for 2010 / 2011 BUT

£100 automatic fine if you are late - so get a wriggle on to sort it.

Roughly our fees start at £240 for each year but you'll need to have your paper work which could be the issue.

Personally I'd assign you to our experienced chaps to help you on this and include estimates (with notes) where necessary then get you on track going forward.

Until you have a chat with one of our qualified accountants we can't give an exact figure but I think you know you need to get it sorted. So best of luck whatever you decide :p
 
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Platform said:
Very hard to say. Could you answer any of the following from my original post:

'What was the level of turnover, how many transactions per month, was everything done via a business bank account i.e all in one place, does the business have any assets, what records have you kept & how?'

Your penalties will be at £200 I believe for late filing.
Click to expand...

No problem:

Turnover: <35k
Transactions per month: <5
Bank Account: 85% in a business account, the rest in another account.
Assets: No
Records: Invoices & Bank Statements is all I have

For the penalties, thanks. That's not as bad as I was expecting.
 
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I personally charge £210pa, normally payable in advance throughout the year via 12 x £17.50 s/o payments.

My instinct tells me your position wont be too complicated therefore, I would do 09/10 for free, 10/11 at a round £200 and then hope to gain your business for 11/12 onward at the standard rate. We'd need a few more specific details first though just to be sure so PM if at all interested.

I'll be totally honest in saying i'm fairly new to the trade hence the deal i'd offer in the hope of securing future business. If this puts you off in any way then go with one of the other guys listed.
 
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Platform said:
I personally charge £210pa, normally payable in advance throughout the year via 12 x £17.50 s/o payments.

My instinct tells me your position wont be too complicated therefore, I would do 09/10 for free, 10/11 at a round £200 and then hope to gain your business for 11/12 onward at the standard rate. We'd need a few more specific details first though just to be sure so PM if at all interested.

I'll be totally honest in saying i'm fairly new to the trade hence the deal i'd offer in the hope of securing future business. If this puts you off in any way then go with one of the other guys listed.
Click to expand...

I dont think the OP will find many other qualified and experienced accountants that would match that:)
 
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Platform said:
Most def hence my original honesty...
Click to expand...

No disrespect meant at all. You've been very open and honest.

I knew Elaine would be along soon - it's nothing more than friendly banter.:)
 
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Thanks very much everyone for the help so far. Also, thanks for the offers to help - it's not so much about the costing (especially as it seems it'll be roughly the same) so please don't feel the need to outbid or anything like that.

If anyone else can chip any other advice in at all, or if anyone else is willing to help out feel free to let me know.

I'll mull it over within the next few days and get back.

Again, thanks very much for the help so far.
 
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Must agree with the above i'm afraid. Get the ball rolling one way or another, most will at least take a quick glace over everything free of charge, even if just via email.
 
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David Griffiths said:
With respect, that's one reason that I didn't quote. You've already left things until less than two weeks before the filing deadline, and now want to mull it over for a few days.

Time is a luxury that you don't have.
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Thanks for the response, sorry If I'm coming across as lazy!

This wasn't a last minute panic before the deadline, just a realisation that I need to get this sorted now rather than waiting and waiting. I'm not expecting to make the deadline for the end of January so will just swallow the extra £100 fine - I'd be hoping to get everything in order by sometime before the extra fines start coming in to place in the next 2-3 months.

Getting everything into a proper state is my priority more than getting everything fixed yesterday, If you know what I mean.
 
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Your tax situation appears to be relatively simple. As long as you have your activation code for filing online, there is absolutely no reason why you could not make the Jan 31 deadline. My advice is to spend this weekend bringing your books up to date. You then need to think about either hiring an accountant or doing the calculations yourself. Dragging your feet will solve nothing.
 
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