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Sam, Accountant
Category: Tax
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HMRC are threating me with bankruptcy unpaid tax

Resolved Question:

HMRC are threating me with bankruptcy for alleged unpaid tax for me and my wife.
My accountant made a bogus PAYE payment to my wife and I without our knowledge as I was closing my old company down in 2009.
This payment which allegedly was meant to die with the company didn't and now HMRC are after the both of us for nearly £100k each.
We sent HMRC all the old company bank statement showing and proving that an insolvent company wouldn't pay out so much money, it proved conclusively that no money went to my wife or I.
Whilst as the director I received some income it was shown on the company bank statements I sent over an 18mth period. However my wife never earned a penny!
We sent the bank statements to HMRC but after there consideration decided not to accept it and still are chasing for tax on mine we've never earned - bizarre!
This has taken over our lives for years now as this is 7 years old this year!
Please help someone as we are sick of dying with worry and the years of sleepless nights
Many thanks
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi Stuart Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer. I can only imagine what a terrible time this has been for you. Was there money left in the company that needing paying out so that the company could be closed down?What do you mean when you state that the payment was meant to die with the company?Did you not sign off on the final accounts to HMRC? How was it that the accountant was able to make or suggest this bogus payment had been made to each of you. In what form did the accountant suggest that you had been paid - salary or dividends, or closing down money .... ?Have you approached the accountant to provide an explanation of his actions? On what basis did HMRC state that they could not accept the reasons you had appealed this - and are they still chasing both of you If you could supply the information asked for - then I can see if there is any coure of action to assist betetr this position and how this could be made.Thanks Sam
Customer: replied 1 year ago.
Hi Sam,
There was no money left in the company it was £59k overdrawn and was heavily overdrawn for a good year before.
My accountant wanted paying before the company was shut and told me that an directors overdrawn account which he would make disappear if I paid him.
Obviously I do after he explained what a director account was. But never explainred to at the time how he would make it disappear, I'm not an account so trusted he know what was he was doing.
As the years have gone by I have understood the situation more.
He created a pay as you earn bonus payment which would undo the DLA but the PAYE do would die with the company as the company would be shut down prior to the PAYE payment would be due - that's my understanding of it.
We never received any money and if we would have, there wasn't any money in the company's to pay us!
The accountant effectively sacked us shortly afterwards stating he would no longer act on our behalf, leaving us high and dry!
How can we be chased for money we never got.
I didn't sign off the final accounts as it was then with the insolvency practise. They chased us for the director loan but never got anywhere because we have no money then or no.
The company was shut down years ago.
HMRC didn't give a reason even though we sent them all the bank statements. They just said that the would still be pursuing us. We feel our human rights have been vialated as we have had no life for years.
It has always seemed simple to me - we never got the money that they are chasing us for the tax for,how can you possibly have to pay money for money you never got?.......
Many thanks
Expert:  Sam replied 1 year ago.
Hi Stuart
Thanks for your response and a full explanation as to the situation.
Whichever way we look at it you will owe tax on the Directors Loan Account - OR the PAYE payment which would have created a loss on the accounts but be a payment liable to tax (and National Insurance)
So even if HMRC put the fact right that you did NOT receive any money - you owed the money due to the overdrawn DLA and it may well be its on this basis that the tax is deemed still to be owed.
You have two choices here but due to the time that has lapsed I am not sure how viable each of these will be
1) You write a letter of complaint to the accountant for his mismanagement of your affairs and hold him responsible for the debt you are being chased for, and if he fails to respond within a period of time then write to his manager/the managing director/senior partner of the accountancy and also to the professional body that oversees his qualification to trade. Make sure each letter is sent special delivery so it has to be signed for.
In the meantime you write back to HMRC - stating that you have supplied them with as much evidence as you can - but you had every reason to believe that your affairs were in order, and again reiterate the fact that other than the directors loan account - which did exist but then saw you go through an insolvency practitioner, so all of this should have been raised by HMRC and included within the insolvency
2) you get in touch with the insolvency practitioner to look at this situation as it should have been included in them wrapping your affairs up as they in essence prepared the final accounts -
Let HMRC know you are taking both these actions and that you will keep them posted - but ask them to verify how can there be any liability due to the insolvency.
And in fact both actions would be advisable
Let me know if I can assist further
Customer: replied 1 year ago.
Thanks Sam
I don't have any problem with paying the tax do on the DLA as it is a fraction of the bogus payment he had to make up.
It was about 60k even if I paid 50% it would be only £30k not the nearly £100k HMRC are chasing me for?
As for my wife she wasn't a director, shareholder or even an employee of the company. She never got s penny, surely she shouldn't have to pay a bean?
Expert:  Sam replied 1 year ago.
Hi Stuart Thanks for your response - then you should proceed on that basis with HMRC initially - but I will stress that due to the time that has lapsed asking HMRC to look at this again will be difficult - but I would advise at due the size of what is being asked for - that is your best bet - and ask for a fully independent officer to look at this further for you Thanks and good luck Sam
Sam and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
One final question please Sam then I will give you an excellent rating.
I understand I will need to pay something but I can't see any reason my wife should pay anything, do you?
Customer: replied 1 year ago.
Hi Sam
If you would kindly answer my last question
Thank you
Expert:  Sam replied 1 year ago.
Hi Sturat Thanks for your furtehr question and apologies for the delay - I head for some sleep! I agree there is no reason your wife should be paying anything - unless she was a director too and there was a overdrawn account for her too or had in previous years been paid a salary. Thanks Sam

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