Thousands of people are unable to pay their tax on time, and many have sleepless nights
worrying about going bankrupt, losing their home or job, or even going to
prison.
In fact, things may
not be as bad as you think, as long as you do not ignore the problem.
The first things to consider are detailed in Can't
pay your tax and will be helpful in understanding how you can help yourself.
To help you understand how to deal with tax debt, TaxAid has produced a booklet which you may download by following this link: Tax Debt Booklet
If you are an adviser in an advice agency or a professional firm, or if you want more
detailed advice, follow this link (Tax debt
for advisers) as the articles go into more detail.
In this section of the website we describe the law and practice in England and Wales.
The legal procedures in Scotland and Northern Ireland are somewhat different,
but follow broadly the same approach.
Some practical points
Before looking at tax debt in detail, it is worth considering some practical issues about tax debt and bankruptcy. Individuals who are threatened with bankruptcy or other recovery action by HM Revenue and Customs may be in a very different position from people whose borrowing has got out of control. Some taxpayers face court proceedings or even bankruptcy because they have neglected their tax affairs. This may be the result of an illness or other difficulty. Without the information from a tax return, HM Revenue and Customs will decide on a figure for income and tax due to the best of its ability. This figure is called a 'determination'. The determination may well be higher than the taxpayer's actual tax liability. Determinations for subsequent tax years are likely to be higher still. In addition, no allowance will be made for tax paid at source, as may be the case, for example, in the construction industry.
If a taxpayer's affairs are neglected for a number of years, the resulting bill, with interest, penalties and surcharges can easily be enough to result in bankruptcy proceedings. Even though this tax bill is not based on final figures, it is legally due and payable. The only way to replace a determination is for the taxpayer to complete and send in a self assessment tax return. Determinations cannot be challenged in court on the basis that the figure is likely to be inaccurate.
Anyone who is being threatened with court action or bankruptcy in these circumstances should seek professional help as soon as possible. It is quite possible that the tax debt will be reduced to manageable proportions once tax returns have been submitted. If you cannot afford to pay an accountant or tax adviser, you may contact us for help. Otherwise, see the FAQ Finding an accountant or tax adviser.
|
