Sudden large tax bill from some years back

K

kate156

Registered User
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Hello
A friend has just told me that her brother a self employed 30 year old with no staff has been contacted by
revenue as he has not paid any tax it seems in the last 6 -7 years. He may possibly owe 100K- 150K
This I find almost impossible to believe that someone could somehow forget their obligations to revenue
as a self employed person . However as a friend I am hoping to provide advise and support to the individuals in concern.
It seem he led a celtic tiger lifestyle and forgot to get an accountant.He has been unemployed for the past 12 months due
to downturn.
He is to meet revenue in the next few weeks. He has about
15,000 in savings at this time. The rest has been eroded over the past 12 months of unemployement.
He bought his home about 5 years ago a regular 4 bed semi-d and has a mortgague on it. Thankfully no wife or children.
As he is single I understand he is 100% willing to sell the house, but there are many similar homes for sale in the area, so
it is unlikely the house will sell. He would be willing to try sell for below the market price if required.
My Question is will his sister or someone be allowed to attend his meeting with revenue. ? I suspect she is concerned for his
health\ welfare at this time. Also she advise he is useless with paperwork and documentation.
My next question is will revenue take the 15,000 as a downpayment and be willing to plan a stage repayment of the rest.
Might the issue a judgement against his home ?
If his siblings were to contribute to the bill would this be acceptable to revenue.

Mnay thanks
KAte R.
 

How did they come up with 100 to 150k figure- Did an accountant give it to him. Is it an estimate from revenue?

Is it for income tax or vat.

Are his records now up to date. now?

How long have revenue being after him?
 
Papervalue
Thank you for the reply.
This is income tax not VAT. He was a sales rep so he did not buy or sell stuff .This is just his own estimation .. and I suspect the 150K end of the spectrun it is about right from what his sister tells me. From what I understand revenue have just contacted him very recently in the last few days. I am horrified and embarrased to say I suspect he is not at all up to date. I expect he is just about to contact an accountant.

I guess he just needs to go and bare all to revenue and try work out a plan for repayment with his savings , possible proceeds from house sales and any income he gets as soon as he gets a job.
 

As the figure is only an estimate maybe he would be better off contact revenue to put off meeting for say two months and have accountant lined up to do tax returns to bring up to date to get exact bill. Whatever income is take away expenses each year to get profit.

Item i would be worried about apart from tax is interest due from prior years to now which could increase the bill a lot.

Should family give him a dig out- I doubt it, like money down the drain.

How much would house sale less mortgage raise?

Is their any inhertinance due?

Better to get returns up to date and filed and them deal with payment issue.
Also want to get list of current assets/liablities to see position he is in.

If he made downpayment can he continue to afford to live day to day
 
Paper value
thank you , your suggestion to get accounts up to date is without a doubt the best possible advice, however I suspect he plans to initially contact revenue to acknowledge their letter and plan a preliminary meeting to verify what steps he needs to take. It is possible sale of house - mortgague would realise some spare cash maybe 15,000 at most which would help a little. He would be willing live with parents for sometime. There is no inheritance due . In reality he cannot afford to give all his current limited saving to revenue as , as you say he needs to live day to day.
Again thank you for taking the time to reply.
 
kate156 said:
In reality he cannot afford to give all his current limited saving to revenue as , as you say he needs to live day to day
Click to expand...

I will now opt to offer you the Revenue view on this statement. --- TOUGH. In modern Ireland people just do not simply forget that they must prepare accounts and returns for the Revenue. Is this a joke or has the bloke got other problems ?? He is going to have to pay Interest, Penalties and the Tax. So if he thinks he owes €150k in Tax the final bill will probably be nearer to €250k.

And no the Revenue won't take a house. They will want cash. And if he is unable to pay then he's going to jail.
 
Mercman , thank you .I do understand the seriousness of the situation and find it unreal myself as does his sister. This is certainly not a joke. The bloke does have 1 other problem\concern in his life that I cannot and will not discuss ( however it does not in any way mitigate his obligations but is a personnel concern )but as you say it is impossible not to know your requirment to prepare accounts. I am merley trying to assist and advise the persons in concern. He will hopefully be able to pay but in reality it will take time. He is willing to sell house if at all possible and use the bulk of his saving as an upfront payment. His siblings wil keep him on the right road going foward.again thank you for your post
 
kate156 said:
he needs to live day to day.
Click to expand...
So does the State.

I'm curious to know how he was self-employed, working as a sales rep, but not buying/selling the goods himself. I guess he was some kind of tied agent, working for a manufacturer. Was he really self-employed (i.e. running his own business), or was his self-employed status basically a tax-avoidance scam to benefit him and the manufacturer.

If it was, the good news for him is that he may be able to stick a big part of the bill onto the manufacturer, if Revenue will deem him to have been an employee, not self-employed.
 
Complainer, I echo your sentiments. There is one thing I am certain of, the employers will have a complete audit in the next few months.
 
The OP is a very polite and evidently a very kind person. The guy who "forgot" to pay tax whilst making money during the last several years is lucky to have her as friend and siblings who will support him.

It is the scale of this guys actions that is surprising - seven years and he "forgot" to pay tax ! - even bought a house (and got a mortgage.how?) .
Perhaps more surprising is that anyone would even seek advice on how to help this person -unless there is some amazing extenuating circumstance to explain his seven years of evading tax.

Most people who pay tax may regard this guy as little better than a thief who has deliberately and repeatedly stolen from them. And now he has been caught.

And, sadly, I suspect , its his family who will now suffer in some way.
 
This story stinks to high heaven; I smell a rat. It makes no sense and I suspect someone is telling porkies.

As 'self-employed' how did he manage to get mortgage approval with no audited accounts, payslips or books of some kind to produce; how did he produce information for TRS qualification / stamp-duty assessment? (was he some form of self-employed financial services reseller or consultant, in which case there may be more problems to surface).

I suspect this unfortunate guy first of all needs to get honest with himself and then with friends and family if he wants advice and support. I too believe it would be a very bad idea to provide financial support.
 
aside from the tax that this guy will undoubetedly have to pay just what kind of interest and penalties would he be facing?how is it calculated?
 

I am afraid I have to agree with this. Even in the Celtic Tiger Boom when mortgages were given to all and sundry, he still would have had to produce audited accounts, so the bit about "forgetting" to engage an accountant is ruled out.

As someone with a tax background, we hear lots of weird stories. One guy gave about 10 different scenarios, inheriting the money, winning the money on blackjack, on the horses, finding the money in a field, a "gang" gave it to him! to mind, none of which were true. People like this were shown the door. There is just no point. Until the person is honest with himself, no body can help.

This person needs someone with a professional tax qualification, pronto. Family and friends, although well meaning, will only muddy the waters. This is the only advice to give to someone in this predicament. Tell the family to act sooner, rather than later.

Also, it is time to get real. If he cant/wont be honest with a tax advisor, no one will take him on, as their professional relationship is on the line. I would get him to get his stuff together, and get a family member to sit in on the meeting with him. Do not approach the Revenue raw on this one.
 

+1

Someone is not being completely honest. The revenue have a certain protocol to follow, they dont just call you up and say you probably owe in the region of €150K.

I'd also emphasise what previous posters said about getting a mortgage, although a self employed person doesnt need "audited accounts" they would have to provide some proof of earnings e.g. accountants report and in some cases a tax clearance cert.

To answer your question directly, the taxpayer can come to a payment arrangement with revenue.
 
MandaC said:
do not approach the Revenue raw on this one.
Click to expand...

Agreed approaching the revenue without having had prior professional advice would be crazy. Exactly what they would want. There are over 2,500 sections of the taxes acts including many grey areas that need to be interpreted. The thought of siblings giving money to this guy is crazy. He has acted like a child. If he is not made suffer personally for his actions then he will repeat them again in the future.
 
I see no reason not to believe the OP's story. I know quite a few people who have lived the Celtic Tiger without paying tax as far as I could tell. Some people actually manage this.
 
It was dreadfully easy to get a mortgage without any accounts. The right amount in a envelope to the right person got mortage approval the following day.

Whilst I won't name the mutual building society that did this, I'm sure everyone can guess! - Information is first hand!

As to the OP - it is quite normal for sales reps to be self employed - most ad execs in newspapers / radio stations are self employed as are most reps selling goods to retailers.

A rough estimation based on my tax returns when I was in the sales agency business is about 15% of overall income will be due in tax. Penalties will be in addition to this.. From the gross, you will need to deduct all outgoings in relation to running the sales agency (phones, car, fuel, insurance, overnight stays, air tickets, clothing, computers, etc.)

A good accountant will negotiate on your behalf both on the amount owed and on a payment plan.

If a payment plan is agreed, it will be on the basis that all furture returns will be on time and any divergence fro the agreement will make it null & void.
 
My first time on this forum and I hope I can be of some help.
I'm an accountant and have seen people walking into my office with no returns done for years and now worried about Revenue.
Generally Revenue would give someone an estimate based on prior history as in returns already..
Also, if he is making that level of profit (est) his level of turnover would lead me to think he was VAT registered ?
 
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