A problem I need some advise with - The Book-keepers Forum (UK)

kez · Member

A problem I need some advise with

kjmcculloch · Guru

Personally, I wouldn't touch them with a barge pole.

However, if you are really set on taking this client on, the very first thing they need to do is speak to HMRC. Without receipts they are really at the mercy of HMRC who will most likely impose fines and compare them to a slightly bigger business in the same line of work for tax purposes.

I still don't think any of this will help him prove his income, as from what you say I doubt he knows what it was.

My advice, steer clear. It's really just not worth the bother.

Kris

Ann-marie · Senior Member

Hi,

I just showed my husband this post as he is a mortgage advisor and he said that the likely hood of getting a mortgage with no actual proof of income is minimal unless he can provide you with at leaset 12 month trading history so you can forecast the next 12 months.

He also mentioned that if there was a 12 month projection he could obtain a mortgage, however the interest rate would be high and the affordability would need to be accessed.

Hope this is of help.

Ann-marie

Amy8n · Veteran Member

Actually I believe HMRC are taking a more lenient approach to such situations providing the offending party comes forward off his own accord and is not caught out by HMRC.

Once instructed by the client, the standard practice is to write to HMRC to explain the situation. In the letter, you should explain that you are working on his accounts and give a date in the not too distant future when the returns will be complete.

However, given that his transactions were all in cash and there is no bank account that is easier said than done. As Kris has already said, HMRC are likely to compare his business to a larger one to work out the tax.

The trouble is, now you know that he hasn't submitted a tax return for 3 years then I think that, as a professional bookkeeper, you are obliged to report this to HMRC.

kez · Member

Thank you everyone for your advise. I spoke to him earlier in the week and advised him to talk to the tax office, or even go in personally to the local office and tell them everything.

He agreed that he needed to explain everything to them and ask for their help and he will keep me posted.

Typical I am just starting out and I get one like this!!!

Kez

Julie · Senior Member

Hi Kez,

Brace yourself for one or two like this !! Think of it as a steep learning curve - a good one to introduce you to the world of bookkeeping.

You have done the right thing in getting him to own up and advising him to come clean.

Julie

kez · Member

Thanks, I will keep you all posted as to what happens!! At least I have kept things right for me.