Unexpected Tax Demand!?

Hi. My partner is a private hire driver. Every month, he pays rent for his PDA to the taxi company he works for, and receives his monthly wages net of this rent. When he prepares his books, he shows this net income figure as income and shows the rent as expenditure. He has been submitting his books, showing the rent and net income, seperatley in this manner, to the same accountant for the last 7 years and they have never queried the way he has done his books.
As he is effectively self employed, if he is liable, he pays tax in 2 annual instalments. The accountant normally advises him
If he has a tax bill for the previous year by November of each year.
He submitted his books to the accountant in may last year and has been calling and visiting them since November to see if he has a tax bill. The accountant never got back to him. Then, all of a sudden, he has received a letter from the accountant today telling him that they believe that, because he has showed his income net of his PDA rent, AND the rent itself seperatley, he has been discounting it twice! They are saying he owes £4k to the inland revenue as a result and that it is payable at the end of January!
We simply don’t have that kind of money at all and have no way if accessing it. My partner has been bankrupt a few years ago and therefor e cannot get a loan. We are so angry that he has been completing his books in this manner all these years and the accountant has not ever said it’s wrong. In addition, they have left it to the last minute to tell him, despite him asking them over and over again since November if he would have a bill. We are beside ourselves with worry…we don’t know what to do. Can anyone please help? Thank you

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2 Responses to “Unexpected Tax Demand!?”

  1. Jo W says:

    Do three things:
    – write a formal letter to your accountant asking him to explain why he has not advised before now that the record keeping has been incorrect for the last seven years, and why you have had to chase repeatedly. Indicate that you are sending a copy of the letter to your accountant’s professional body (his letterhead will show who regulates his activities; googling will get you the contact for a complaint)
    – write to the professional body and say you wish to make a formal complaint
    – sent copies of both letters to HMRC and say just what you’ve said in the last paragraph of your question.
    However tempting it is to really go overboard, keep all three letters as calm and unemotional as you can – they will make far more impact on the recipients.

  2. Petruscl says:

    sad part – you are liable – the accountant knew it and your partner knew it. A new team hit the road two months ago for just this scam. I am sorry, I sympathize but it is due.
    Good part – we will (for a quick resolution and get the threat out to the others) negotiate. Step one – come clean – co-operate to the absolute maximum, volunteer data, hand over books – and ask if there is any leeway in the penalty.
    You can get the bill spread over time – if you make an offer they have to consider it. You are an early case so they will want to close early. The end of January is a threat – the team wants a deal.
    £4000 for a seven year fiddle is cheap – they will do a spread deal – but be honest now – they have read your banks already – they know you better than you do.

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