Testimonials – Adam B

Adam B.., London

“In 2008 I decided to leave my PAYE job in the financial sector to become a freelancer providing software testing services to Financial Institutions. This decision was based solely on the fact that I had a number of debts running up and thought if I was to go freelancing, I could pay these off within a couple of years and then return to a full time PAYE role. I didn’t envisage that this would be a permanent future and only a short term solution to pay off some outstanding debts as the contractor market was very buoyant in early 2008 (before the crash).
The only way to actually get one of these contracts was to go through an employment agency and you had to either have your own Ltd Company or operate through and Umbrella Company. As I didn’t see it as a long term solution, I was advised by a colleague at that time to go down the umbrella route. After a quick search on the Internet, I picked the first promoter that came up. The website looked professional and after various discussions with them, they assured me that everything was above board and the take home would be that similar to a Ltd company but that I wouldn’t have the hassle of having to set up and run my own Ltd company (which I had absolutely no knowledge of being able to do). I was assured by them that there solution was accredited by tax counsel and fully disclosed to HMRC by way of DOTAS (disclosure of tax avoidance scheme) and that the money I would receive was also taxed and national insurance paid(which it was). In effect, it would be a similar return to that of a Ltd company and for avoidance of doubt, tax avoidance is legal and tax evasion is illegal.

This scheme was registered with HMRC as a tax avoidance scheme. So I had no reason to doubt anything at all.

By 2010, I was still working as a contractor and decided as it was looking more permanent, I should open my own Ltd company which I did.

Fast forward a few years and in 2012 I started receiving letters from HMRC advising that they were investigating payments that had been made to me. So for the past 3 years, I’ve now had the stress of this lingering over me. I have been assured throughout that there is nothing to worry about by the scheme promoter and that their scheme is fully compliant with UK tax law.

As the law was passed to allow APNs to be issued, I’ve now had 3 issued to me in the past 2 months for tax years 2008/9, 2009/10 & 2010/11 demanding that I repay £27,000 within 90 days. Not only do I not have this money, I’m not in any position to be able to pay it in any short period of time. HMRC advise a possible repayment option of up to 2 years which would be more than £1000 per month. It’s just not achievable and also I’m still convinced that I have not done anything wrong. So this is now causing a huge problem in my marriage and my home life as we are becoming increasingly stressed at the thought of what looks like is going to happen. With no option to be able to pay this amount, I will end up facing bankruptcy. I currently have 2 step daughters at university who we are supporting financially and a third daughter in her final years at secondary school. I doubt the 2 eldest ones would be able to continue their degrees once I’m bankrupt. My wife runs her own business which is relatively new and still finding its feet financially. Should I be made bankrupt, this business would have to close meaning the loss of 2 staff which she employs. I myself still run my own Ltd co as I’m still contracting. My Ltd company employs 2 people and annually pays around £12k in corporation tax. This company would also fold and being made bankrupt would mean I would no longer be in a position to work in my industry anymore in the financial sector as all contracts also have to run through credit checks. So I would end up unemployed and probably claiming benefits (which I have never claimed in my entire life).

I have contacted HMRC to discuss any possible payment options, but as I could only meet a repayment plan of around 4-5 years, they have advised me that this is outside of their 2 year allowance. They are requesting further income/expenditure details but I really do not see how it will be possible to meet their demands and therefore the only way to turn will be bankruptcy.

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