Say someone worked for a company for 10 years. but then basically went on a cash in hand existence for the last 10 years, with bugger all to show for those ten years.

How do they get themselves back into the system?

What are the things to consider?

Don’t really know a lot of details, but I know someone like that, and would like to have a semi informed word with them to tell them they really should get themselves sorted out. I know they’d like to, but really they don’t know how to go about explaining the last 10 years and righting themselves, they have a fear about it don’t know what to do to get them back in.

Guess the big question here really is, what would happen if they just registered as a company tomorrow and started paying tax and NI from tomorrow?

I know a guy who did that (a long time ago). It involved a very big tax bill.

with bugger all to show for those ten years.

A lot depends on what you mean by ‘bugger all to show’

Do yo mean they’ve kept no records?

Or they never made significant amounts of money?

Or that they did make a significant ammount of money but they’ve spent it all?

made a decent enough living, not exorbitant amounts, enough to keep ye in rent and weekends out etc at a comfortable enough level, will have kept no records. I’d probably have a guess around the 25-30k level at best, some years worse.

Suddenly going legit while continuing to trade?

My experience of setting up a small business is that there wasn’t really any scrutiny as to what I was doing and what I’d been doing before, it was all done online.

no tax, NI, or conversely benefits for 10 years….. I’m not sure how to explain that away.

Can the HMRC look into bank accounts and the like?

10 years of 15-20K above the tax allowance, that’s like a £150-200K taxable income, which is going to be a hefty amount of back tax and NI if he wants to be honest about it…..potentially £40K +/- at a guess.

HTF does someone even do that? Going off (HMRC’s) grid for ten years and earning that kind of money cash-in-hand is hard work I’d have thought. Have they not been sending him self-assessment forms?

Don’t ask me, alien concept to a wage slave like myself! 😆 Would just like to give them some options to look at before another 10 years passes…

Things to consider:

Getting back into the system is fairly easy, they never really left, get job give NI number, away you go.

If they want to continue to trade their self-employed work, talk to an accountant, I’d suggest asking them to back-date as much as is prudent.

They’ve missed 10 years of NI contributions and you need 30 for a pension, but dare I say they don’t deserve one.

BTW £25k – £30k take-home is a decent income and equivalent to a salary of £32k to £35k if they’d bothered with the inconvenient business of tax and higher than the UK average, who do they think they are, Starbucks?

Someone I know just went into the tax office as he needed a CIS card, when asked where he had been he said looking after his kids and just doing odd jobs to buy food etc

Never got asked for a penny, it was probably 4 years though rather than 10

He could just tell HMRC that he was having a ding dong with TJ about building jumps in local woods, at the same time as a discussion on coil forks with TomW and had engaged with Edukator on the pros and cons of diesel vans.

That would certainly explain 10 years, I reckon they’d give him some kind of reward….

😆

Just start declaring all his income from now on and thats it,there’s a risk he will be asked what hes been doing for the last 10 years,and as a result may have to pay tax on those earnings.
.

Or he could declare a smaller amount this year,more next etc etc snd build up until hes declaring it all.

Thr first approach means he is fully compliant with the law fron now on, thr second approach only from when he is declaring everything. But neither changes the fact he had not been compliant for the last 10 years,so there is a risk he will be chased for unpaid tax regardless of how he handles himself in the future. That risk will only increase the longer he continues to be not compliant.

He could also declare the last 10 years and pay whatever is due,and be free of any risk of a surprise visit ftom hmrc ,but i guess he cant afford to do that.

I am not a lawyer or tax expert though,these are just my opinion

Say he’s been abroad for 10 years, in far east or such like.
Or had some money, and lived off that, but now its run out

When I came back to uk 2 years ago,all I had was my NI number and passport, they didnt seem to have any other record of me

Working and paying taxes and NI isn’t a legal requirement is it? Just start paying them now as if starting from scratch. Have a backstory ready incase of any questions. E.g. living off savings, kept by a partner/relative, been travelling/living as a hippy.

Going back a long way, when I first started working, HMRC got really stroppy about what I’d being doing before hand (being a child at school then going to Uni etc). Seemed to think I’d been working and not paying tax, took a lot of faff to sort it all out, they even wanted proof of how much I’d been paid for paper rounds (I kid you not)….

Working and paying taxes and NI isn’t a legal requirement is it?

No, but working and earning and not paying tax and NI while (presumably) enjoying our roads network, NHS, policing and so on is an offence.

I certainly wouldn’t lie – I’ve not been on the ‘wrong’ side of the taxman but i have been audited before and once they spot a loose thread, they might pull it until the whole thing unravels. So if you say you’ve been abroad for 10 years and they can trace anything to show you haven’t, expect them to look a bit harder.

Why’s STW being so easy on this BTW. Normally we’d be demanding crucifixion, with rusty nails? Is it because we hate the taxman even more than we hate freeloading?

This won’t be a problem for him, I did much the same.

On the form for registering as self-employed, there’s a box for the start date of your self-employment. He can just put in the current date.

The level of scrutiny at this initial stage of things is presumably quite low, but they’ll jump on him from that date onwards if he doesn’t file tax returns. And he should ensure that all tax returns are thorough and don’t take the piss, so there’s no reason for hmrc to audit him and view his bank account and other past history.

Why’s STW being so easy on this BTW. Normally we’d be demanding crucifixion, with rusty nails?

When someone’s trying to do the right thing, is it better to encourage them or shout at them for doing the wrong thing previously?

This is STW; we do both… are you new here?

This is STW; we do both.

Crucify him with scented roses….

when asked where he had been he said looking after his kids and just doing odd jobs to buy food etc

Working and paying taxes and NI isn’t a legal requirement is it?

Its clearly not possible for 10 years to pass without you doing any paid work or receiving benefits and not die. So if you haven’t been claiming benefits then theres a fairly heavy implication that you’ve been working and not paying taxes unless theres a another factor your can point to. Maybe you won the lottery. Maybe you’re a professional gambler.

One of the big drivers behind benefit fraud is claiming a benefit allows you to work on the black market (not just cash in hand work but also things like the drugs trade, prostitution and trafficking, organised crime and so on) without ‘not being in the system’ – a fraudulent benefits claim means you don’t ‘disappear’ and you don’t need to explain yourself if you later ‘reappear’.

A perfectly reasonable explanation for 10 years passing without either working or claiming benefit though is that you live in a house with / are in a relationship with someone who is working and earning money.

Its clearly not possible for 10 years to pass without you doing any paid work or receiving benefits and not die

A perfectly reasonable explanation for 10 years passing without either working or claiming benefit though is that you live in a house with / are in a relationship with someone who is working and earning money.

So it is possible?

So it is possible?

Well – yes – not a well written first paragraph.

My point is though – if you were to reappear in the system the question – for the authoriies – is where have you been if you’ve neither been contributing to or in the care of ‘the system’.

You can offer up the explanation that you’ve been ‘kept’ by someone else. Which is fine if its true. Its ‘fraud’ if its found out to be untrue.

and my point is if they sniff that it’s untrue and start picking at threads, they are quite good at finding out where the untruths are. Selective truth telling may be one thing, saying you were finding yourself in india for 10 years when they can point to for example several speeding offences in Bolton over the same period would be daft.

As for the do both comment. I’m actually going to call that back in –

When someone’s trying to do the right thing, is it better to encourage them or shout at them for doing the wrong thing previously?

It seems someone’s been working for cash for 10 years and has avoided paying Tax and NI, etc. all that time. Why shouldn’t they be called to account and pay what’s owed. Why are we offering ways to ‘get back into the system’ with valid reasons why they have been out of it for 10 years, when the actual answer seems to be ‘Go in, ‘fess up, pay your back tax like the rest of us have had to and then pay it in future as well’

If that’s not the case I apologise, but on the facts so far it looks a bit like fraud / tax evasion.

When someone’s trying to do the right thing, is it better to encourage them or shout at them for doing the wrong thing previously?

[quote]
It seems someone’s been working for cash for 10 years and has avoided paying Tax and NI, etc. all that time. Why shouldn’t they be called to account and pay what’s owed. [/quote]

It seems they’ve gotten into doing the ‘wrong thing’ without it being planned and certainly without planning a way out. The ‘right thing’ is something they don’t seem to have experience of and theres no small amount of temptation to be less than honest.

I hinted at the issue of organised crime etc – it gives and idea of the scrutiny that could be possible when he re-presents himself to the system.

I think the first step for the OP’s pal is to sit down with a calculator – work out what he’s earned, work out what genuine expenses he as (if he’s kept such records) and do a back of the fagpacket calculation of what he’s underpaid. I’d suspect its ‘a lot but not enough to go to prison for’ so thats worth considering if he’s tempted to tell any lies.

At the moment the only thing he’s guilty of is doing nothing – of not doing what he should have done. Being guilty of doing ‘something’ that he shouldn’t have is probably worth avoiding.

Its clearly not possible for 10 years to pass without you doing any paid work or receiving benefits and not die. So if you haven’t been claiming benefits then theres a fairly heavy implication that you’ve been working and not paying taxes unless theres a another factor your can point to. Maybe you won the lottery. Maybe you’re a professional gambler.

it’s possible if you’ve been earning around the tax threshold (ie less than 10K a year). I know plenty of musicians (I was one) who aren’t really on the system but wouldn’t be eligible for any significant tax anyway.

But that’s not the case here. As a student loan payer, I’d need to be pulling in about £43K a year to be left with 30 after deductions. That’s a pretty big wedge that matey was stashing under the matress.

Incidentally you can also be done (IIRC) over ‘assets’. An acquaintance was convicted on drugs charges; one factor in the verdict was his BMW and expensive material possessions that he couldn’t convincingly explain how he paid for.

it’s possible if you’ve been earning around the tax threshold (ie less than 10K a year).

thats the ‘doing work’ i referred to – theres a presumption that for 10 years you’ve been able to eat and keep a roof over your head – so theres a presumption that you’ve earned something even if its not very much. Even if you don’t earn sufficient to have to pay tax on your earnings you’re still expected to declare those earnings. The only good news if that was your situation is the back tax would be pretty modest, although you’d still have a fair few charges for filing late returns. Your musician pals are very much in the same boat, just looking at a smaller bill.

On the back tax thing, what do you think the process would be there, just to get statements from your bank account, for the last 10 years(can you even do that?), then figure out earnings based on that?

That’s the only real point the tax man has to look at anyway?

As for assets, tbh, you’re looking at vans and tools over the years, most likely paid for in cash. I think also likes of property wouldn’t be in their name either. So not a large paper trail actually there to find.

Also, say they approached an accountant with this problem, what’s the accountants responsibilities there, are they under obligation to report this, is there a client secrecy privilege/obligation?

As for assets, tbh, you’re looking at vans and tools over the years, most likely paid for in cash. I think also likes of property wouldn’t be in their name either. So not a large paper trail actually there to find.

Then they can just make some assumptions and come up with a figure they think you owe….

what are those based on?

It seems someone’s been working for cash for 10 years and has avoided paying Tax and NI, etc. all that time. Why shouldn’t they be called to account and pay what’s owed. Why are we offering ways to ‘get back into the system’ with valid reasons why they have been out of it for 10 years, when the actual answer seems to be ‘Go in, ‘fess up, pay your back tax like the rest of us have had to and then pay it in future as well’

If that’s not the case I apologise, but on the facts so far it looks a bit like fraud / tax evasion.

It’s definitely tax evasion. I thought we all understood that.

But do you think telling someone with (I presume) minimal savings that they’ll have to pay £50k in back taxes as well as on future earnings will encourage them to get in touch with HMRC?

It’s a pragmatic choice between something and nothing.

That’s the only real point the tax man has to look at anyway?

As for assets, tbh, you’re looking at vans and tools over the years, most likely paid for in cash. I think also likes of property wouldn’t be in their name either. So not a large paper trail actually there to find.

You would be surprised! We had a decorator work for us a while back who use to do loads of cash in hand jobs. His wife shopped him in to HMRC when they divorced. They took pretty much everything he had, then all he earns goes to HMRC and he gets a small living allowance from them. They built this huge profile of all the cash in hand work he’d been doing and arrived at figures for the period of time he’d been working cash in hand.

Some people aren’t keen on the idea of tax evasion and it’s easy enough to tip off HMRC if they are that way inclined.

I was a director of a small limited company for a few years and the only thing that really worried me was when making sure everything was correct in any dealings with HMRC.

It’s definitely tax evasion. I thought we all understood that.

yip.

Why minimal savings – they’ve made maybe £40K +/- more than someone earning the same that has been paying tax. (I know the answer BTW, because they’ve spent it)

It’s up to the Tax office to determine how to get it back – deductions from future earnings for example, but if there are savings and fungible assets, then I assume they can get hands on those too?

I wonder what I’d spend my £40K on if i’d managed to avoid paying it in the last 10 years. Except I didn’t because I spent it on roads and hospitals and schools……..

Look, i see both sides and the chance to make amends is good, and should be IMHO taken by both sides without unduly punishing them for coming clean. But they have lifted £40K from the public purse over that time.

I was a director of a small limited company for a few years and the only thing that really worried me was when making sure everything was correct in any dealings with HMRC

I was only an employee, but made a genuine error on calculating the value of employer reimbursed petrol (used the wrong rate for half a year) and was left in no doubt that if I’d have been scamming it then their ability to dig could have been quite a bit deeper.

Why re-enter the system? I’d declare my house and garden an independent state, and then offer to pay ongoing trade tariffs equivalent to normal tax and NI.

And when the taxman asked for all the money I owed, I’d say no, I’m self determining, you can get your mucky paws off all my Philonian dollars, and then pay all the back tax.

I’d still put up a nice flag in the front garden though.

I guess the real answer is that he’ll have to take the risk of getting caught, but that’s a risk he’s running anyway, unless he wants to move somewhere that doesn’t like the UK.

jonv

If the thread was can you state the blinking obvious about this situation, you may be making a valuable contribution here. But well it’s not…

It’s asking for solutions and yes mainly looking at how to get back in with minimal fuss/payment. If it’s too much they probably will just continue as is, as I said they have a fear/feel trapped by the situation.

We’re looking at reality here not really interested in hearing about the morality of it, that is quite obvious to everyone.