TAX CASE # 2 INCOME TAX
Summary of Case: March 1993
2.1 Taxation liabilities issued by HMRC (Hammersmith District) as at 2 March 1993 stood at £95,132.51; these were based on accounts prepared by a firm of Chartered Accountants who had acted for this client for a period of 15 years.
2.2 The client had suffered a shortage of liquid funds and was unable to settle the liabilities of £95,132.51 for the years 1989/90 to 1992/93 due to the collapse in the property market.
A “Statutory Demand” was issued to the client by HMRC in Worthing, Sussex, which would be followed, within 30 days, with “Bankruptcy” proceedings in the “High Court” if the settlement was not made.
2.3 Following the appointment of James Wright & Co on 2 March 1993, representations were made to both HMRC (Hammersmith District) and the “Collectors” in Worthing and an application was made under Section 33 Taxes Management Act 1970.
2.4 The accounts prepared by our predecessors, for the four years to 31 March 1992, were withdrawn and re-prepared by James Wright & Co before being submitted to HMRC for their agreement.
2.5 HMRC (Hammersmith District) rejected the accounts as the proposed liabilities were over £55,000.00 less than they expected and started a formal enquiry for the four years.
2.6 After several meetings with the “District Inspector” the “Investigation Manager” and the Inspector assigned to the case, a letter dated 4 October 1995 arrived confirming a liability of £37,582.00 as being agreed by HMRC (Hammersmith).
2.7 The final settlement represents a difference of £57,550.51 and also gave the client two years and seven months to make the settlement to HMRC, thus saving the client from the sure bankruptcy faced in March 1993.
