You have worked all your life to build up a successful business and now its time to cash it all in and sell up. You have found a buyer and they are willing to pay the full asking price, no quibbles. So why should you beware of the taxman? It’s not as if you have committed tax evasion – have you?
Skeletons in the cupboard
Do you remember everything that has gone on in the business over say the last 20 years?
Do you remember those “funny” transactions that never got resolved and were buried?
Do you remember being somewhat “commercial” and not necessarily following all the rules?
Do you remember that tax scheme that you thought was “too good to be true” but was never picked up by HMRC at the time?
Well if any of the above applies, maybe they will be unearthed as part of the due diligence process. How will you explain them now to the potential purchaser? Will they be seeking a lower price and/or a claim under Warranties and Indemnities?
Is it time to fess up?
Some will. But how do you do it? Do you tell your trusted adviser of the last umpteen years? What will they think of you? Do you tell the taxman?
Some won’t. It then becomes a ticking time bomb. Might it be called tax evasion?
What will the taxman do?
Investigate. Not just the company’s past tax compliance but also your own financial affairs. If they suspect fraud, if you are lucky you might be offered the Contractual Disclosure Facility and CoP 9. If you are unlucky, you may be prosecuted.
What should you do now?
Seek the advice of a specialist who is experienced in handling these sort of matters. If you owe tax, then you owe tax. No tax adviser can negotiate a tax rate just for you. Interest will be payable as well as the tax is being paid late. But the penalty – no that is where the specialist earns their money and saves you from paying more money to the taxman than may be necessary.
But you need to trust the specialist and tell them everything at the outset. Not necessarily down to the last penny at the initial stages, but enough to understand what the parameters are. And what the parameters are not.
Will it be an open cheque book?
No. It can take a while to recall everything let alone to attribute amounts and dates etc. which is why I offer the first 2 hours of my time for free so that I can understand the nature of the problem and how I may be able to help you. I will also estimate the cost in terms of any payment to HMRC, how long it may take and what my costs may be.
Don’t underestimate the emotional cost – the stress and worry until the matter has been resolved.