Hi Folks
am all very new to this,hav been managing well for the last few years quite good income through self employment, but with the recession (im an electrician) and an ungoing tax investigation i reckon im going to be in bother, my accountant thinks as they are going through everything with a fine tooth comb for the last 6 years i could be looking at £20000 bill for tax and VAT , they will only give 1 year to pay this back at the most which will be impossible as my current turnover is only slightly higher than this , this will account for 50% of my total debt, how likely are they to accept IVA? bankrupcy wont benefit them as although i own my own house its in neg equity, but im told they would rather bankrupt me as it gets me off their books quicker, which seems daft to me as surely the country needs all it can get instead of effictively writing it off.
i really want and need to avoid bankrupcy like the plague and have already entered into an agreement with other creditors to try and save what i can for the taxman. will they work with me in IVA do you think??
HMRC have different criteria to other creditors and the pence in the £ figure is not the only thing they look at. Firstly, any outstanding returns must be submitted or your IVA will be automatically rejected since HMRC can understand people have financial difficulties but there is no justification for not completing a form.
Compliance is an issue and there is a difference between mistakes, falling into arrears and deliberately withholding Crown monies. These are also factors HMRC take into account.
Notwithstanding the above, HMRC do support IVAs for viable businesses where all creditors are treated equally and the best offer is made. They have a specialised unit in Worthing called the Voluntary Arrangements Service or VAS and provided your proposal meets with their criteria there is no reason for rejection. Take some free advice and good luck.
Speak to one or two professionals for some expert advice on this subject. As Michael says, it's not all cut and dried with HMRC!!
Visit www.iva.com for a list of companies and reviews and give some a ring - the advice is free.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
The tax man needs to be a bit more pragmatic. A six year investigation for £20k seems a bit excessive! It's probably cost tax payers many times that in their attempt to recover the money!
Hopefully your accountant will have everything up to date and you can proceed quickly. Some firms are more experienced in self-employed/own company cases, so make sure you pick one which understands your business too.
im told each tax inspector is on commision for amount of liability they can get pragmatic and government are a contradiction i think.when i say 6 year though thats how long they have went back on my records.. the investigation will have taken less than a year!!
thanks for info michael , there have been no arrears just an accumiation of errors over the years, but i have made full disclosure and havent tried to conceal anything. I have been offered a job so may wind the buisness up but as a sole trader still dont want to go bankrupt would they look more favourably at that situation? thanks for the non judgmental comments folks by the way!
20K would warrant a relatively low key investigation at local level ( although it wouldn't seem low key from the taxpayer's point of view) 100K or a sniff of fraud and they'll know what you had for breakfast !!!
Anything to do with the construction industry gets a little better look --- as, like an onion, there are many layers to be peeled back.
Anyhoo -- I am sure many a tax inspector would be pleased to find out he is on commission ... although he will be wondering where the money went !!!! They are too low in the pecking order to get bonus payments !!!
Last edited by Foggy on Tue Feb 21, 2012 2:15 pm, edited 1 time in total.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Foggy - do you work for HMRC? You seem to know a lot.
Totheteeth - I hope you can get things sorted quickly. Given the decision of whether to keep your business or not, good advice from someone who really understands is vital.
The link Jan posted is great and Michael is also known for his experience with self-employed cases.
If you take a PAYE position and close down any PAYE,VAT and self assessment schemes, HMRC will certainly look more favourably on your IVA. At least you cannot increase your liabilities to them when tax is deducted at source.
The amount does seem low for six years so your errors are unlikely to be that bad and I doubt if HMRC will have you down as a Lester Piggott or Ken Dodd!
Michael i thankyou for being so helpful , i have some very good reasons to enter IVA as opposed to bankrupcy which ill go into when i contact your firm when i get the final figures.
thanks again
With any luck you will get to talk to Michael himself, who, as well as caring about his firms clients, talks a lot of good sense and has a realistic approach.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Contrary to popular belief, HMRC are actually very supportive to well presented and fully researched IVA proposals - and do not want to make people bakruptcy unecessarily.
In considering an IVA, they will want to understand why their debt has not been paid and what changes you are intending to make to the business financial controls and your lifestyle to ensure that you will be able to pay all future taxes on time.
They are far more thorough than most other creditors, and will not support poorly presented proposals at all, but for firms that specialise in dealing with self-employed persons and SME's, I generally find them hard but fair. To put things into perspective, I cannote remember the last time my firm had an IVA rejected by HMRC - but they are often hard-taskmasters to please.
Good luck in your research and wish you all the best if you decide that an IVA is the right route for you.
