been self emplyed 5 years and not paid any tax - help

[devilhunter]

5 years ago i borrowed �40k to buy a taxi,then 2 years later another �20k to upgrade it and finally another �40k to buy a 2nd taxi and rent it out.All cash came from my house via several remortgages.
My father was due to do my accounts,but became ill and after a 3 years battle died 2 years ago.
I have never paid tax on my earnings of about �30k but i have all receipts,bills,running cost etc.
I know i have been silly but i need to come clean now.
Whats the best way to sort this out and does the �100k I have spent count towards my tax.
Please no flaming as i was not intending this to happen but my fathers death really hit me hard.

[auzzie]

See an accountant.

[buildersmate]

Yes, you can offset some the capital investment in the taxi, but you need an accountant.

[devilhunter]

Will I go to prison or get a fine that will force me to sell the business ?

[MustafaTickl]

No, not If you go voluntarily to HRMC rather than waiting for them to find you out (which they probably will in the end). What you need to do is to instruct an accountant to prepare accounts together with the arising theoretical tax returns for the years that you are in default. Then either you personally or the accountant should go along to your local Tax office and explain your situation. That seems like a big dark step to you at the moment, but in reality you will find that you will be treated with kindness and understanding. The Inspector will check the accounts and then prepare a bill which will add interest and a penalty. The penalty if you go voluntarily will be about 5% of the tax outstanding. The Collector will send you the bill and tell you when you have to pay. It helps a bit if when you first go to HRMC you take along a cheque for the amount that your accountant has calculated, but it is not essential.

[jedimistress]

And if you made a �30,000 profit each year, that is without deducting any expenses, please expect a tax and NI bill of about �7280 per fiscal year.

I think your accountant or tax advisor shoud be able to add expenses to bring it down quite dramatically though.

Don't panic, you won't go to jail. You will have interest and late penalties which will bring up the costs but that's all.

[devilhunter]

Thanks very much for your answers - things look a lot better.

[onelife]

I am in the same boat. and about the same amount but for 7 years. God know how I got into this situation - Thanks for the reassurance.

A subquestion...

I am in some debt already and just managing to keep head above water. Not anything stupid like credit cards. Mortgage (160k) and a student loans ( 5k ) will they take this into account?

The thing I am always worried about is how long i will have to pay. Will they demand it straight away or can you defer or set up a plan with the HRMC

Many thanks if anyone can help

[devilhunter]

From what i have found out they will try and work for a solution that ok for all.
They wont expect it settled right away and I feel alot better about the future now.

[wonderland]

Hi there, I'm also in a similar situation to yours. Hopefully you have already got it sorted by now. I'd appreciate if you could let me know how it all went. I want to legalise my tax situation too, but a bit scared and not sure how to do it. Regards

[Tom Braider]

Wonderland, don't wait for an answer to your question. Contact the revenue TODAY. (Or at least contact an accountant.) Every day you put it off makes it harder. Nobody goes to jail for this kind of thing; it's not a criminal matter. Normally, only the taxman will know about it.

[devilhunter]

An update to this.
I went to the Inland Revenue and just came clean and they were very very helpful.
I completed a tax return for the last year which I paid plus got an up to date statement on the NI and started paying that.
I have also signed up to the online self assessment payments it was the best thing I ever did.
They are fully aware of my situation and just want me to get my current years up to date before I pay of the any other outstanding years.
Having a tax reverence number has worked wonders for my credit applications and I have just expanded my company again with another taxi.
My advice is dont be scared of them as they will help you sort things out.