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bigduckontax, Accountant
Category: Tax
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I left UK in 2001 after spending 4 years, when my activity

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Good morning
I left UK in 2001 after spending 4 years, when my activity collapsed, going back to France. I returned to the U.K. in 2008 permanently and have worked as a self employed since,
HRMC keeps claiming an income tax dated 1998 and 1999, for nearly £10k penalties and interests included.
20 years have almost passes, is HRMC founded to claim the payment?

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

When you left in 2001 did you send a Form P85 to your tax office?

Customer: replied 28 days ago.
No. I had to leave, this was a case of emergency, I could not pay my rent, I could not pay bills, I was left without income and I travelled back to Paris to stay with my family and find a job. The period was awkward, just after the September 11 terrorists attacks in NYC. I was trading on financial markets, everything was disrupted.
I had an accountant, I don’t know what he did or not, he’s not in the U.K. anymore.

Then you should send one in immediately. Fortunately, there is no time limit as to its submission, it is available on the web and can be filed online. This will put your tax position in perspective.

Are HMRC's demands for these earlier years correct, or are they their estimates of what they think you should have earned? That Department is very keen on making assumptions, invariably incorrect and always in the revenue's favour. If they are wrong then you should appeal against their assessments which you do by merely writing a letter. HMRC can go back indefinitely to recover unpaid tax.

I am so sorry to have to rain on your parade.

Customer: replied 28 days ago.
In Court, HRMC admitted that would I have stayed, I wouldn’t have had to pay given the business losses. But I left and they calculated the taxes due, something I can’t really check as I don’t have my records. In France it is 5 years back except in the case of fraud, which is not my case. This is why I was surprised to see the claim after 10 years.

Then you should remind them tartly of the position they adopted in Court that you had business losses to offset the income, a small matter that they have conveniently forgotten!

Also, the time limits for recovering tax debts is 4 years for normal situations, 6 years where there has been careless behavior on your part or 20 years where there has been deliberate behavior on your part. As this matter went to Court and the taxman emerged with egg on his face the Department's position is dodgy to say the least and their demands should be rejected out of hand as time expired.

Customer: replied 28 days ago.
All right, so I should go back to Court then, as at the moment, my payments don’t cover my current taxes, HRMC using them to cover the 98/99 taxes.
You wrote initially HRMC can go back indefinitely to recover unpaid taxes, I’m a bit confused as you mention 4, 6 or 20 years in your last answer.

Yes well, that is the theory, but it is modified by Departmental practice as I explained. There is no need to go to Court, a letter will suffice.

To what payments do you refer? If they are for 98/99 you should demand a return of the sums involved as any tax debt is time expired.

Customer: replied 28 days ago.
I have worked since 2008. I pay my taxes, but these payments are used by HMRC to cover the £10k claimed for the period 98/99. Therefore I’m late for the current taxes as my income doesn’t allow me to cover all at once. I’m also threatened with action.

Well, tell them to take a running jump for trying to collect taxes which are not owning in any event and time expired to boot. Tell them that any action they may care to take will be most vigorously defended and in any event you have an absolute defence. HMRC will always adopt a try on in the hope that the taxpayer will just roll over and pay up; don't!

Customer: replied 28 days ago.
All right. Thanks for your advice. I will send them a letter then. With the hope they will take my request into consideration this time, something they have refused till now.

Not a request, a demand; HMRC are far to keen to try to recover tax to which they are not entitled. I was once faced with an Inspector of Taxes demanding immediate settlement in cash for tax which was not even due. He did not get it needless to say, merely reported to the Senior Inspector in the office and the company received an immediate apology and a cancellation of the demands.

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Thank you for your support.

Customer: replied 28 days ago.
Thank you and have a good day.

Delighted to have been of assistance.