I was wondering if someone could advice me on the following problem. A taxi driver who I don't know that well asked me for my thoughts on his tax affairs are maybe I should say lack of it. He has not done a return in 15 years, he tells me he went bankrupt about 10 years ago and the revenue have never been in contact with him not that it matters.
He still taxis and gets £1200 a month paid into the bank for doing school runs the rest is just your normal cash transactions at weekends. What would he need to do to get out of this mess, I am no expert in tax advice so any feedback would be good.
Presumably the school runs will be recorded in several places - CRB springs to mind and you've noted the bank. Why is it that the government or HMRC don't allocate resources to this sort of evasion?
It can only be a matter of time before they catch up with him. He needs professional advice but presumably, a tax adviser would file a money laundering report. Can you have a quick guess at the taxes he would owe? If not, try a working figure of £20K tax due. It'll be worse if he doesn't come clean.
Find out how long his income has been similar. If it is only 2 or 3 years, then it might not be horrendous.
It would be worth going through the numbers with him to form a better picture. Get him to set aside some time to sit down with you with some notepaper and a calculator on hand (or a computer and a spreadsheet) and try to work out what his turnover is (some of it will be estimated) and establish all the costs he has to incur as a taxi driver.
For the turnover, that £1200 per month is a starting point. Has it always been that amount, or has it increased to that over time? Does he have his bank statements? (You said it goes into his bank). For his weekend cash jobs, he'll probably have to just estimate - unless he keeps a record of his jobs. (If he's private hire, I think he's supposed to write down all the jobs he takes in order to show that he has taken them as bookings, and isn't just picking up fairs off the street as a hackney cab would).
As for the costs, the most obvious ones are:
1) Petrol/Diesel (likely to be the biggest expense by far) 2) Insurance (Taxi drivers need specialist - more expensive - insurance) 3) MOT test fees (the taxi 'MOT' is a little more than the ordinary car MOT test) 4) Car maintenance/repair costs 5) Annual taxi licence 6) Other vehicle related costs - eg regular car cleaning 7) Phone (if he's a private hire driver, he'll probably have a mobile phone specifically for taking jobs) 8) He might advertise in some way - eg in yellow pages 9) Does he (like many taxi drivers) have cards printed that he gives out to people?
The chances are, like other taxi drivers I know, he probably can't be doing with fiddly bits of paper and records, so much of it would have to be intelligently estimated. Consider looking for typical fuel consumption figures for the type of car he's had an any given time for example, and extrapolate the fuel figures from that and his estimated mileage.
Alternatively, I've seen a figure of 25% of the turnover used as a reasonable estimate for the cost of a taxi driver's fuel. I couldn't swear to that being acceptable by HMRC, but if the push came to shove, I'd expect them to accept reasonable estimates.
The bottom line is that, while trying to come up with some figures for this guy might seem a scary, difficult prospect, it might not be as hard as you think - and the figures might not come out as bad as you might think!
I think this would be a worthwhile exercise (a) for the sake of it, to show yourself that you can, and (b) to help put his mind at rest in terms of the tax bill he could be facing if he carries on as he is and gets caught. The longer it goes on, the worse it gets. (And whether he then chooses to do something about the situation, once you've come up with some numbers for him, is in his hands, really.)
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
