HMRC chasing after 12 years! What's going on?

[Lucan Unlordly]

Apologies about the lack of fine detail.

A business friend working alone as a Ltd Company had great difficulty getting his former accountants to release certain papers when he told them he no longer required their services. While waiting some debts were accrued and written off as the Ltd was folded. A similar situation with self assessment incurred a small debt of a few hundred pounds which HMRC billed accordingly.
The advice he received at that time was not to pay it, that an appeal to HMRC explaining the difficulties in getting hold of old paperwork would be made and that this small debt would be written off.

Some months later a second request for payment was made and again he was told not to worry that it could be sorted. After 2-3 years having had no further communication from HMRC notification of a visit from Bailiffs was received, a call by his accountant putting a stop to it. This game has continued on and off every couple of years since.

Today, some 12 years down the line he has received a bill from the HMRC which is about 4 times the original debt.

I am sure that some will ask 'what does his accountant say', which has always been, leave it we will sort and for a year or more they do, so the question is what possible course could they be taking, or are they simply getting it put to the bottom of the pile hoping it will go away? Apart from the time when demands to pay were placed in the hands of Bailiffs - and quickly removed, there doesn't appear to be a hierarchy of demands, red letters, final notices etc.,

 

[DWS]

What is the bill for? You say self assessment but is it for tax owed or for penalties?
If it was for tax owed why did he not just pay it?

 

[Lucan Unlordly]

The advice he received at that time was not to pay it

a second request for payment was made and again he was told not to worry that it could be sorted.

What is the bill for? You say self assessment but is it for tax owed or for penalties?
If it was for tax owed why did he not just pay it?

Tax owed but built up as penalties. Although not having money to do so at the time, with hindsight, yes, he should have paid it but was advised not to. The situation would be much clearer had it not gone away, most times for a year or more. One minute it's in the hands of Bailiffs, next thing it's not even being chased. How come?

 

[MBE2017]

Unfortunately for your friend HMRC debts never die, unless the put it in writing. I think he needs a better accountant, this should have been resolved a long time ago, oneway or another. Doing nothing is not an option.

 

[Chris Ashdown]

Is the accountant Chartered, if so complain to the society

 

[DWS]

Is the accountant Chartered, if so complain to the society

Maybe it is not the accountants fault, it could be that they speak to HMRC who then agree to withdraw the money owed but it does not get recorded correctly, unless we know what the money owed was for and why the accountants believe it should not be paid I can not see how we can comment.
Your friend needs to contact HMRC themselves to find out what is going on and also get in writing from their accountants why they believe the problem had been resolved.

 

[Chris Ashdown]

True but the accountant seems to be withholding information that might assist to person

 

[Lucan Unlordly]

Thankyou all, but I was trying to understand if there is any possible get out clause that the Accountants have used to try to put this to bed? I believe that the difficulty getting the necessary documentation from the former accountants all those years ago was considered good reason for the delay in presenting a set of accounts the following year, whereupon the charges incurred were to be written off. I can't be sure of that, but from a fading memory etc.,

 

[Lucan Unlordly]

Unfortunately for your friend HMRC debts never die, unless the put it in writing. I think he needs a better accountant, this should have been resolved a long time ago, oneway or another. Doing nothing is not an option.

Nothing was done as the debt has 'disappeared' each time, the longest period being something like 2-3 years, and the Bailiffs were put off never to return etc., In fairness to the accountant whatever they've said or done has delayed any action. I'm trying to establish how come, before seeking approval to talk to HMRC and the Accountants - whereupon i'll ask the question - on my mates behalf?

 

[DWS]

But if the money owed is for self assessment income tax and not penalties then it seems more than likely that the tax return must have been filed, in which case it would be interest on the original amount that is being charged and bumping up the amount.
It would be very unlikely that HMRC would write this off, from what you say and the the return being late are you sure that the accountants only managed to get any late submission penalties cancelled but the tax was still due?

 

[Lucan Unlordly]

But if the money owed is for self assessment income tax and not penalties then it seems more than likely that the tax return must have been filed, in which case it would be interest on the original amount that is being charged and bumping up the amount.

I've assumed it was for tax owed but on reflection it may have been just penalties. I'll ask the question.

 

[WaveJumper]

And is it possible that the accountants did everything they should have done for the Ltd but in fact as mentioned above the issue is with the self-employment fillings were these done by the individual themselves, it seems a lot of head buried in the sand has been going on hoping it was all going away?

 

[lesvatadvice]

is the debt for the limited company which has been wound up, or the sole trader?

 

[Paul Norman]

This is a log jam that I have watched before.

Accountant A is not, it appears, solving the problem.

You need to introduce Accountant B. Or your friend does. And be completely up front with Accountant B, before appointing them, about the situation, including the log jam.

If Accountant B is good, they will have a solution, and some advice, and be able to track down what the debt relates to and whether it is payable. That will give them the answer.

The next question will be about ability to pay, but one step at a time.

 

[SteveHa]

Hate to say this, but if this dates back 12 years it is barred from amendment or displacement.

Your friend needs to engage with HMRC as a matter of urgency.

 

[Lucan Unlordly]

is the debt for the limited company which has been wound up, or the sole trader?

Sole trader

This is a log jam that I have watched before.

Accountant A is not, it appears, solving the problem.

You need to introduce Accountant B. Or your friend does. And be completely up front with Accountant B, before appointing them, about the situation, including the log jam.

If Accountant B is good, they will have a solution, and some advice, and be able to track down what the debt relates to and whether it is payable. That will give them the answer.

The next question will be about ability to pay, but one step at a time.

Accountant A is alleged to have caused the problem by delaying the handover of papers. It would not be hard to believe that some degree of malice was involved as Accountant A was 'having it away', charging several thousand pounds for a service that is now costing a few hundred. Accountant B, appointed 12 years ago, is a long established practice with more than 30 employees.

 

[Lucan Unlordly]

A bit clearer as to how this panned out now.

Accountant A alleged to have delayed transfer of paperwork to Accountant B, who dealt with the closure of the Ltd Company and re-established my friend as a sole trader. For reasons unknown the Sole trader accounts, were not submitted in time and a fine was issued. Whether delays on receiving Ltd Co., paperwork was good reason, I don't know and welcome your view?
Although at the time the fine was a relatively small sum, my friend was suffering severe hardship, couldn't pay, and one assumes this was his defence, supported by Accountant A causing the delay, hence the fine allegedly being set aside. My terminology, clearly it wasn't but being told not to pay suggests the accountant was confident that the matter was sorted.

I won't repeat the details as to what's happened from there as they are stated in earlier posts but I ask again, do the reasons given above sound credible and likely? Would HMRC have agreed to wipe the initial debt due to hardship and the circumstances as to how they arose? Would they have been inclined to do this rather than deal with a complaint against one of their members - Accountant A?

 

[DWS]

I think the answer is still ‘we can’t say’ only Accountant B will know whether the delay in getting handover documents caused the SA to be late, but why did they not just submit the return on time and include a note on it saying that the figures were only estimates and then amend the return when they had all the information.
We also do not know why Company A delayed the handover of documents, could it be that they were owed money? Or were waiting on further information/instructions?
Too many ifs and maybes, you need to get your friend to contact HMRC and find out what is going on and exactly what is owed and why.

 

[Newchodge]

I cannot see how handing over papers connected with a ltd company could have any effect on submission of sole trader self assessment.

There is no way that HMRC would accept 'hardship' as an excuse for not levelling a fine that was due.

Would they have been inclined to do this rather than deal with a complaint against one of their members - Accountant A?

HMRC has no relationship with Accountant A. Accountant A may not be a member of anything and there is no evidence of any complaint against Accountant A.

I eould suggest that Accountant B has a lot to explain.

 

[DWS]

I cannot see how handing over papers connected with a ltd company could have any effect on submission of sole trader self assessment.

There is no way that HMRC would accept 'hardship' as an excuse for not levelling a fine that was due.

I assumed (and most of this post has been assumptions) that they would have been waiting for either payroll or dividends to include on the return, but as I said no reason why the Sole Trader accounts could not have been submitted to avoid penalties and then amended.
Agreed Accountant B should be explaining their part in it.

 

[MBE2017]

Would HMRC have agreed to wipe the initial debt due to hardship and the circumstances as to how they arose?

If they had, they would have confirmed in writing or by statement IMO. As for would they have been inclined to do that rather than investigate one of their members, you seem to misunderstand, the accountants are not part of HMRC in any way, they are a private concern.

 

[Lucan Unlordly]

If they had, they would have confirmed in writing or by statement IMO. As for would they have been inclined to do that rather than investigate one of their members, you seem to misunderstand, the accountants are not part of HMRC in any way, they are a private concern.

Doh, yes sorry, my bad............getting my wires crossed regarding affiliation to an accounting body and HMRC

 

[Lucan Unlordly]

Too many ifs and maybes, you need to get your friend to contact HMRC and find out what is going on and exactly what is owed and why.

His argument has previously been that he employed the services of an accountant so that he doesn't have to get involved with HMRC, the thought of which throws him into blind panic. It's why I've become involved, and this thread is to get a broader view before I talk to accountant B and HMRC if needs be. In that respect I thank all contributors.

PS: I still can't work out how or why debt collection agencies walked away?

 

[MBE2017]

It is always the individuals or companies responsibility, even if they engage an accountant. On your return you sign a statement agreeing with the accountants figures, you also sign to your accountant you have provided all correct information etc, this keeps the responsibility with you.

 

[Lucan Unlordly]

UPDATE of sorts...
An accurate bill for the last Tax year was received from HMRC, my friend paid it immediately but £300 of it was set against the earliest debt with no correspondence or permission given. Again questions arise, why just £300 and not all of it. Is there a limit? Why have previous payments not been taken off of the earliest debt?

 

[MBE2017]

UPDATE of sorts...
An accurate bill for the last Tax year was received from HMRC, my friend paid it immediately but £300 of it was set against the earliest debt with no correspondence or permission given. Again questions arise, why just £300 and not all of it. Is there a limit? Why have previous payments not been taken off of the earliest debt?

Your friend would do better asking his accountant these questions than yourself to a forum with little accurate information.

 

[SteveHa]

There is no statute of limitations for a tax debt, and so no time barring. The debt. and associated interest and penalties, still exist. Where a payment is made there is an order of set-off, being:

Tax, penalties, interest.

Interest is last because it is not itself interest bearing.

It is likely that only £300 of the original debt is tax, and so that is what HMRC have set-off before using the balance against the current tax debt.

 

[Lucan Unlordly]

Your friend would do better asking his accountant these questions than yourself to a forum with little accurate information.

His accountants told him not to pay, so he didn't, and the debt 'went away' for a couple of years, collectors were called off and the saga continues.
I think it's fair to say that there's a fear of uncovering the reality of the situation so the desire to encourage the accountants to formally assess may be on the back burner, particularly when there is no money in the pot.

 

[MBE2017]

His accountants told him not to pay, so he didn't, and the debt 'went away' for a couple of years, collectors were called off and the saga continues.
I think it's fair to say that there's a fear of uncovering the reality of the situation so the desire to encourage the accountants to formally assess may be on the back burner, particularly when there is no money in the pot.

Maybe, but that will not change or solve his problem. Until he resolves this issue, he will simply continue to be fined etc by HMRC. Anyway, it’s down to him to decide whether he wants closure on this or not.

 

[Lucan Unlordly]

Maybe, but that will not change or solve his problem. Until he resolves this issue, he will simply continue to be fined etc by HMRC. Anyway, it’s down to him to decide whether he wants closure on this or not.

Of course he does. HMRC say pay - he can't.

 

[MBE2017]

Of course he does. HMRC say pay - he can't.

So how much is owed at present?

 

[Lucan Unlordly]

So how much is owed at present?

What's the relevance?

 

[MBE2017]

What's the relevance?

I have negotiated payments for people I know in the past, but it tends to be larger figures where they seem more reasonable in doing so, but really large amounts where their are assets available they tend to be inflexible.

That said it has been many years since I helped a couple of people out, so things might be different today.

 

[Lucan Unlordly]

So how much is owed at present?

A couple of grand I think...