I closed my business down last year without declaring any earnings to HMRC. I had some money saved to pay an accountant once I sorted the paperwork out, but things have changed and I’m now on benefits. I have spent my savings and cant keep up with my Credit Card bills. If I were to file for bankruptcy, what would happen to the tax that I owe? do I still need to file my tax returns with an accountant? I can’t afford this.
First of all, has HMRC approached you for a payment? Do you actually owe anything? If you are not certain, call them and advise them of your change of circumstances. There are many people in the same situation and they have people who can help. If it turns out that there is a substantial payment due, you might consider bankruptcy or a Debt Relief Order (if the amount is below £15,000). A DRO is similar to a bankruptcy and is designed for vulnerable people on low or zero income. If a bankruptcy is unavoidable, you would need to pay the £525 Official Receiver’s fee, though you would be exempt from paying the £180 Court Fee. The good news is that you will be able to include any other unsecured debt in the DRO / Bankruptcy.