We successfully eradicated £4,400 of revenue determinations, late filing penalties, surcharges and interest for a client who had failed to file tax returns from the year ending 5 April 2001 to present day. The client walked away compliant, up-to-date and £300 better off!
In our experience it is often tradespeople that struggle with record keeping and maintaining an up to date status with regards to their self-employed status with HMRC. The volatility of the construction industry and those aligned with it means that the focus is always on finding work, keeping work and maintaining a regular supply of income. I personally have witnessed clients go through good times and bad in rapid cycles. I know a lot of these clients spend considerable time chasing payments from contractors who used to pay very speedily, but then suddenly slow down their payments, sometimes to a grinding halt.
In essence combatting the receipt of money, and the uncertainty of work is an all-consuming process – let alone doing the job itself. As per HMRC’s view, this in itself is not an excuse to be tardy with paperwork and tax related obligations but we at Cooper Bradshaw at least understand such situations on a humanised level.
Our client, like many others, had been in and out of multiple self-employments, employments and CIS arrangements over the last ten or so. In some short periods he had also been un-employed. As the years passed, racing through the conditions described above combined with a lack of knowledge of tax matters and unfruitful attempts to obtain receipts and CIS deduction certificates from previous contractors (often a painful process for us to achieve!) he finally found himself ten years behind with demands from HMRC in the region of £4,400.
The £4,400 was the usual mix of revenue determinations (made up sums), surcharges (charges upon those made up sums), interest (charged upon the made up sums and surcharges) and late filing penalties.
Despite some knowledge to the contrary it was HMRC’s view that the client had continually been obligated to submit self assessment tax returns throughout all these years.
First we built a time-line of events, to the best of the clients recollection and then approached various parties for requests for information to substantiate and clarify the time-line into undisputable fact. In the case of HMRC we again found that despite the fact they demand information for years which there is no legal basis to retain records for (ie those that are over six years old) and which they are happy to charge, penalize and pursue for, their own record keeping for the same periods is shockingly lacking. Fortunately for us, the banks, contractors, previous employers and to a certain degree the Department for Work and Pensions, were extremely helpful with our requests for information.
With the information at hand we began the process of compiling accounts and tax returns for the relevant periods and explanations for periods where no tax returns were required.
Approximately half of the years concerned needed tax returns, which we dutifully filed. A couple of the years concerned were too old for us or HMRC to quantify, so we successfully pressed for an agreement to strike off those. In the years where he had been either solely employed or unemployed we brought this to HMRC’s attention and they removed the requirement to submit a self assessment tax return and in so doing, removed the assessments, surcharges and interest attached to them.
Our client is now fully up to date and has a supportive framework in place to ensure he does not lapse again. His next deadline for filing will be 31 January 2017 and it is likely that we will actually file in April/May 2016 such is the quality and consistency of the information flow now we have set him up with an easy way of keeping all his information and progress in one place.
In terms of the financial outcome, our client walked away with around £320, which was better that writing a cheque for £4,400!
- Keep everything that has numbers on it, even if it is too old! You cannot guarantee that old contractors, banks and government departments can help you.
- If you are self-employed but then become employed, or even unemployed, tell HMRC, in writing.
- If you employ the services of an accountant, ensure they do the above too and provide evidence of doing so.
- If you feel you will struggle with any of the above: visit, call or email us. We work with many kinds of clients with all different levels of experience, knowledge and (record keeping and tax related) ability. We provide lots of free services that could make your life much easier!