Open your brown envelopes please!

Do you fear opening those brown envelopes from HMRC? It makes me sad when I help clients with backdated tax issues. Why? Because I see how much avoiding doing tax returns has cost them in penalties and  interest.  Sometimes in networking and in contact with clients, I come across people who fear the HMRC so much that they don't open correspondence from HMRC. I have met people who confess to stuffing them in drawers. I have a client who hands me any official looking letters unopened (who I am encouraging to work on this).  Recently I have dealt with a client who couldn't face dealing with their tax affairs due to reasons I won't go into.  They hadn't filed tax returns for 6 years. The amount they were due each year to HMRC wasn't that much. At the time they could have afforded to pay their tax bill.  But now HMRC have added penalties and interest which is almost that same as the backdated tax. Yes, that's right. Double the amount.  So if you owed say £5,000 over 5 years you now owe £10,000. Payable now. No time to negotiate payment plans. Of course I am working had to reduce the penalties. But I still need to charge my client time to do this. So even if I can reduce the penalties it has still cost them.  £1,000 a year would have been manageable. Break that down into monthly payments, that would have been £83 per month.  Which is easier to face? £83 per month or £10,000 payable now?  Most definitely the former.

So I beg of you. If you are ignoring your tax returns please please open the envelopes now and face what is due. Make a cup of tea (or a pour yourself a glass of wine if it's that bad). Read carefully what is they are asking for. Often if you haven't being making tax return there will be estimates of the amounts due.  If this is the case you need to complete the returns to work out how much you really owe. Sometimes this can be less than what HMRC say you are due. Please phone the HMRC and arrange a payment plan with them. Explain your situation and talk it through with them. While you will still incur interest charges of 3% per annum, penalties will be reduced. Ignoring your tax doesn't make it go away. It makes the problem get worse. If you really can't face dealing with your tax affairs then seek help. Speak to someone close to you that can sit with you.  Or seek professional help if you don't have anyone that can help.


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