Tax Investigation

[Farmer Jones]

Together with my (now) former wife (Decree Nisi only at the moment) we ran a Limited company for 10 years or so. During the divorce proceedings it appeared that we had both not paid sufficient tax due to an error in the accounts. (We where both employees of the company, directors and shareholders, seems we owe Income Tax & Some Corporation Tax, but the VAT is spot on....the issue is around Tax on dividends).

When we discovered we hadn't paid sufficient Tax we engaged a Tax Specialist to deal with HMRC on our behalf. This is a costly activity, and due to the situation (the company was a 50/50 split in shares) my wife & I both owe HMRC Tax and have to pay the Tax Specialist to deal with HMRC (it means we have to re-do the accounts for the last 10 years, re-submit the returns & pay the outstanding tax).

The Tax Specialist is putting me under pressure to pay his fees. My former wife refuses to engage with the Tax Specialist at all and insists I pay his fees in there entirety. It seems I have no choice, because to sort out my Tax situation I also sort out hers. I am having to put a personal guarantee levied against the former family home to pay the Tax Specialist, and probably HMRC.

My former wife demands I pay her outstanding Tax and that I am responsible for it.

If I pay the Tax Specialist his Fees, does that mean I am liable for my wife's outstanding Income Tax?

[2222]

I assume that you still have to sort out the division of the family assets before you can get a decree absolute. The tax liabilities are presumably going to have to be paid out of the joint assets before these are divided between you, but apart from that you have no liability for your wife's taxes. Presumably paying one tax specialist rather than two saves money between the two of you.

In many marriages, each partner is responsible for specific areas, and I suspect from what you have written that the company was mainly your responsibility. I think you should probably sort out the issues, but the costs will obviously impact on the funds available to divide between you.

[ostell]

No, only the person with the tax liability is responsible for payment. She need to take it up with HMRC. I can't see HMRC coming after you for someone else's tax liability.

[Peridot]

Bearing in mind the various issues you are having, I really recommend you get some proper face to face advice on all the different aspects. I appreciate this will cost more money, but with the intricacies you are dealing with, I'm not sure that we can give you a complete overview that would cover all aspects giving you sufficient guidance in this complicated situation. We're here for support of course and you can always put ideas past us for opinion or guidance from those who may have had similar situations, but the help of professionals is really needed in my opinion.

You need to find a way through the forest you're currently in. It seems every issue will be interlinked at some point with all financially impacting on the other whether previous business, financial arrangements following your marriage break up, school fees issues, keeping the mortgage going or child maintenance issues.