My business is running at a loss and I have decided to throw the towel in, I've had enough of taxman?

Question

I've sent off my last tax return now I want to clear out my office and rid myself of the constant reminder of the turmoil I am in. Can I burn or shred all the files or am I legally bound to keep them in case the taxman wants to drain more blood from my empty lifeless soul?

And I haven't tried to avoid paying tax - a friend helped me with my tax return and we put something in the wrong column - it wasn't spotted by the tax office at the time but now they have found it and are throwing the book at me. I should have got an accountant but didn't think I needed one because I was doing everything by the book (or so I thought).

Thanks Sue I guessed I'd have to keep them. At the moment the only sad thing about me is the fact I'm alive.

Thanks Jingo - it's running at a loss now but they are looking at last year, that's why I can't afford to pay them the tax, I could have paid it last year but they didn't charge me for it because they didn't see the error in the tax return (and nor did I).

Answer 1

I think you have to keep business accounts for more than 7years...but cant you just imagine that a fortnight after you get rid is when they are going to want to see them..cos it always happens like that!!

I just wanted to share this with you in the hopes of cheering you up...

FOR THE COLLECTOR OF TAXES

For the following reasons I am unable to meet your demand for Income Tax.
I have been bombed, blasted, burned and sandbagged, walked on, sat on, held up, held down, flattened out and squeezed by Income Tax, Super Tax, Tobacco Tax, Purchase Tax, Beer Tax, Spirit Tax and Motor Tax and every Society, Organisation and Club that the inventive mind of man can conceive, to extract what I may not have in my possession, for the Red Cross, Blue Cross, Double Cross and every other cross in the country.
The Government has governed my business until I do not know who owns it.
I an suspected, inspected, examined, informed, requested, required and commanded, so that I do not know who I am, where I am or why I am here at all.
All I know is that I am supposed to be an inexhaustible supply of money for every need, desire and hope of the human race and because I will not go out and beg, borrow or steal the money to give away, I am cursed, boycotted, talked to, talked down, talked about, held up, rung up, run down, robbed and damned near ruined.
The only reason WHY I am clinging to life at all is to see what is going to happen next.
Yours faithfully.

Answer 2

If you shred your records whilst an enquiry is going on, the tax people can fine you up to £3,000 for each year.

Unfortunately, they just process tax returns and don't look at them properly until later. They will blame you if the mistake you made leads to more tax being due, and you will have to prove it was human error and not negligence.

If you have made a tax loss in your final period, you can carry it back to set against profits of earlier years. This may help you to get some of your money back.

Unless you are confident about dealing with the tax inspector face to face by yourself, you need an accountant or a tax consultant to help you with the enquiry.

Answer 3

well seeing as it was a genuine error, they shouldnt be making you pay anymore than the additional amount due, plus interest and 5% surcharge on this amount from the date that the tax was due to be paid.

if the company was running at a loss, I think the losses can be carried back 1 year seeing as you have now ceased trading and that loss can be offset against the previous years income as long as you have no other sources of earned income in the year to set it off against and would reduce the tax due, therefore any penalties and interest that they have charged you should also decrease.

did you complete the last tax return yourself? if so did you work out the notional disposal proceeds on any capital allowances you have claimed for, ie assets such as desks, chairs, shelves, cabinets, car, van, etc.. etc... even tho you prob havent sold em, you need to provide a fair value in order to take them out the business. this normally allows you to provide a lower figure than normal and therefore increase your losses.

you still have some time to amend it if you want so I would suggest going to see an accountant as they may save you some money and stress.

as for the files, even tho you have ceased, you still need to keep them for 6 years from 31 Jan 2008.

Answer 4

Sorry to hear your story. The tax office are pretty ruthless when it comes to getting what's due to them, even if it's a result of an error. However, it might be worth your while getting an accountant involved even at this late stage, they may be able to give you advice regarding any possible savings you could make on VAT/Tax bills for this year, which could offset your bill. It's also worth talking to the tax office about a repayment plan - they will usually have an installment plan offer, at a hefty rate of interest, but it might be enough for you to trade your way out of your current difficulties... if you think you could turn the business around. If you're likely to continue trading at a loss, then of course you're right to chuck it in :-(
Best of luck for the future.

Answer 5

If your business is running at a loss, there should be no tax to pay.

Edit. OK, understood. Yes, you do have to keep your records, otherwise you are seriously in the manure. If there was a genuine error - on both parts - you should be able to come to an accomodation. The alterntaive is that you go bust, the taxman gets nothign and you too have real problems on your hands. My suggestion? - try to reason with them in an intelligent and non confrontational way. You may be pleasantly surprised by the reaction you get.

Answer 6

Hi georgygirl, I am really sorry that you have this problem, It must be a crushing disappointment and very stressful. I agree with all those who have said you shouldn't shred anything, I think you have to keep tax related documents for 7 years, but I am no expert.
I think you need some professional help, but I don't know how costly that might be. Have you contacted the Citizens' Advice Bureau? They have all sorts of advisors there.
Good Luck!

Answer 7

well dont even think of shreding your documents...even if you leave the business you must have the documents..and for the taxman... you should have hired a proper consultant who would dealt with your taxes as its very complicated matter... i have hired a tax lawyer who deals with my returns so i have no tension about returns at all i just go there to sign the return that has to be submitted its my lawyers job to fill in the return and put the right things in right columns...i might have a business option that might get your profits if you are interested then cantact me

Thanks & Regards
Khawja Shams (owner/entrepreneur)
Khashar Trading Co. (Importers & Exports)
http://www.khashar-trading.com
[e-mail]
Pakistan

Answer 8

I really feel for you. My previous job involved me talking to owners of business' and a lot were in the same postion as you. You should keep hold of all your tax documents to prove what you need to. You should be able to appeal against any decisions.
Mistakes are made, its all part of life...lets hope the taxman can see it.
And good luck, you never know what a new start holds for you.

Answer 9

Assume you are in the UK. You are required by law to keep records for six years. If the Tax Inspector is doing an investigation into your affairs, I would recommend keeping a couple of years prior to that too. You need to be able to prove the figures you submitted. If you can't, you may be charged penalties or extra tax.
Unless of course you have something to hide............

Answer 10

If you are in the UK then unfortunately even shredding everything will not hinder them, they have a large number of accountants, I remember reading a story in the paper about a guy who burned all his papers, it look the tax man 7 years to rebuild all his accounts but they managed.

From my experience with them, if it was a GENUINE mistake, they will help you to comply, if it was a DELIBERATE mistake or negligence on your part you may be fined etc etc