A sole trader who ran into difficulties with HMRC
A sole trader who had an engineering business ran into difficulties with HMRC when he received notice that he had liabilities totalling over £30,000 due for unpaid PAYE, VAT and self-assessment.
Despite his best efforts in speaking with HMRC, they issued a distraint notice and called to his business premises. They gave the trader notice that they were to seize a number of his assets including a forklift to recover a portion of the debt owed.
The trader was adamant he did not owe such a large debt to HMRC, and was unsure how this amount had arisen as he has suffered a large downturn in trade over the last few years.
The full picture
The trader contacted Business Debtline who advised the trader on HMRC procedures and rules, and following Business Debtline reviewing his previous years trading returns it came to light that his accountant was submitting “projected” returns to HMRC for the last two years which were not a true reflection of his current trading, and were based on his previous trading when he had a greater turnover, expenses and also profit.
Business Debtline advised on HMRC procedures and the importance of submitting accurate returns and how HMRC base the level of debt owed on the information provided to them. Business Debtline also made the trader aware that the level of debt would be re-determined by HMRC once the correct accurate returns were submitted, and this should ultimately lower the debt due.
How we helped
The trader discussed the matter with his accountant, and the accountant agreed to make sure the amended, correct trading returns were submitted to HMRC within one week, which dropped the level of debt due to HMRC by almost £20,000. With further assistance from Business Debtline HMRC then agreed to cancel the distraint notice and cease recovery of his assets.
The debtor was then able to make a small lump sum payment to HMRC from the sale of some stock to lower the debt further and arranged a “time to pay” order with HMRC to clear the remainder of the debt over the subsequent 12 month period.
The trader was very relieved that his business assets were not seized as it would have made his ongoing trading more difficult. He is maintaining his “time to pay” order to HMRC and has also changed accountants to ensure these issues do not arise in future. The trader is also now eligible for tax credits which he was unaware of as he had been submitting incorrect returns, and his overall financial situation has improved significantly since contacting Business Debtline.