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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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I have a question that really bothering me, I hope to

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Hello, I have a question that really bothering me, I hope to get some professional advice.
I have registered self-employment from 09/2012, and from 09/2013 I became full time employee and I am until today, but I did not close my self employment account.
I only filed 1 invoice in the year 05/2013 and 1 invoice in the year 05/2014, ever since I did not have any business activities but concentrate on my career.
The hmrc contacted me regarding my return ending 05/2014 year, as there was a fault resulting me paid wrong tax, and required me to correct the tax return.
This is really understandable and I am ready to comply their requirement. However the odd thing is, I have received 2 different letters from 2 different officers all regarding compliance tax return check, one of which was the above decision, the other one require me to collect 1 year of bank statements and have a meeting with them.
My problem is, I have only personal account, and back in 2013 and 2014, I had an ex boyfriend who borrowed large sums of money from me and returned me at times, the going out and coming in money was in cash, bank transfer, and even from his friend, I broke up with him in March 2014 and ever since no such flow. But I worry that HMRC would deem these as undeclared income? It is very hard for me to collect evidence now since broke up, meanwhile I think it would be difficult for HMRC to collect evidence to against me , as these people are not business/ self employed at all.
May I get some advice, or if I am in danger please let me know what possibilities I will get? Eventually I think even after months/ years of investigation it won't go anywhere... but I just won't hope to waste too much time on the string.
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
HelloYes receiving a notice as you have can be upsetting. HMRC could simply look at the bank account and see incoming money . There is a burden of proof.When HMRC looks into tax returns that will often involve a review of all monies received. They wish to establish whether taxpayers have declared all taxable income and gains. Unless those amounts can be properly identified, HMRC will probably decide that the receipts are additional taxable income. All taxpayers, not just those who are business owners, are at risk of challenge from HMRC if monies are received which cannot be readily identified. The burden of proof before the tribunal is on the taxpayer. You should look to explaining the the amounts by showing the amount that went out to him (his name and last address you know should be written down). The fact that the payments stopped in March also shows that you stopped advancing him money so you will want to have something that shows you no longer were associated. Perhaps you have an e-mail, text, or other item that refers to the break up or money itself.In general, the standard of proof applied by the tribunal is on a balance of probabilities. Is it probable that you advanced him money? Yes.I would suggest you prepare a statement that simply explains the amounts. You should go through your accounts and list each with the date that matches with your account. In your statement start by listing his name and address and the date you broke up. Also list his friend's name and contact information you have or had.Preparing this before hand is easier than trying to stammer through it at a meeting.I hope this is helpful
TaxRobin and other Tax Specialists are ready to help you
Customer: replied 2 years ago.
Thank you very muchCustomer although complicated I am happy as long as I know what to prepare.If you don't mind may I ask 1 more question, actually my ex boyfriend owe me a lot of money after borrowing from me, until today there is approx. £20,000 in total... ( Before my set up of self-employment account, I had savings in my saving account to live with, and thus throughout the process I did not go below survival line) and thus no matter what on my bank statements would trigger concern from HMRC, the figure is very right, I checked it again thoroughly today.Since I did not make any profit altogether in that year 05/14, does it mean there is no taxable income over money coming in from lent out? Don't tell me HMRC would only look into my ins not outs.......Thank you very much for your patience and I would like to thank you again if you can kindly reply me:)Regards,
Xinran ChenSince I did not make any profit, does that mean there is no income taxable on that year?
Expert:  TaxRobin replied 2 years ago.
HMRC would look at ins and outs of your account.That is why you want to prepare a written statement about each one. HMRC wants to see the business income but you need to be prepared to show the incoming amounts and the outgoing amounts as separate from business.