Court wants to know my NI number..

Well then they can't "know you as three different persons".

I though speeding fines were a fixed penalty

In message , Shirl writes

Suspected offenders are offered a fixed penalty but not if the speed is beyond ACPO guidlienes or they are going to lose their licence under totting up rules. If the supsected offender does not take up the fixed penalty then the case is heard in court when the mags use their sentencing guidelines.

Does the unlimited carrying forward of losses also apply to limited companies?

Yes, for the same trade.

In message , Peter Saxton writes

You might be missing a trick there, if they think you are three in one, maybe you could fill in the Minister of Religion self-assessment form and find some more expenses!

Or it could be credit card debts, yes? Credit card companies were pretty free and easy and generous with the credit they extended in the

How about if he lived more-or-less at subsitence level, and was still sliding slowly deeper into debt every year?

What if this self-employed person isn't sent a tax return? Does he/she still have to fill one in? Or is it possible that the IR doesn't send him/her a tax return because it's better for them if he/she *doesn't* fill one in.....

The person could be running his/her little 'business' at a loss, and sliding ever deeper into debt due to the interest he's paying on his debts, but knowing that at some point in the future, he will inherit enough money to pay off most of his debts, after which, there would be no more interest to pay, and therefore the little business could then be profitable and grow. ...Your comments?

~MDH~

Yes.

Makes no difference. If you have enough income for any tax to be due, then you *must* pay it, and it has a higher priority than any other debts you may need to settle.

Mind you, if you live at subsistence level, it is likely that your income will be so low that very little, if any, tax would be due. I dare say you *could* live on £5k a year.

No, you only have to fill one in if you are sent one and asked to fill it in. But even if you don't get sent one, it is your responsibility to pay the right amount of tax, which in practice might means you need to ask them to send you one.

Better for *them* meaning better for IR? That would only be the case if he would be due a tax refund, which seems unlikely in the circumstances.

I don't understand this scenario. If the word "therefore" is to be taken at face value, one would need to deduce that the only reason the business is now making a loss (but will not once the debts are cleared) is because it (the business) has to pay interest on (by implication) business loans, which interest exceeds what would otherwise be the business's profit but for the loan interest.

But if the debts are private and not business-related, are you suggesting the business should deliberately be making a loss? That doesn't make sense. What would he live off? Is he a "carer" for (and sponging off) the person he expects to inherit from?

Surely the business (if it's his only source of income) should aim, in the first instance, to make profit equal to the personal allowance of £5035. This means no tax is payable, nor C4NI. He would still have to pay C2NI of £109 if his profits exceed the exception limit of £4465.

But surely it then becomes even better to make profit over and above the £5035 even if it means paying some income tax, because there will still be something left for him of this extra profit even after the tax thereon has been paid.

Yes; I meant the IR... I'm thinking that it would be more profitable for the IR if he/she doesn't send a tax return if he's making a loss, because then he won't be able to set those losses against future tax liabilities.... Also, if a person is only going to be liable for a tiny amount (or zero) tax, and it is unlikely to cover the IR's admin to deal with it, they'd be better of not dealing with it.

That's what I meant. For example, if the person is paying £5,000 a year in loan (e.g., credit card) interest (used to run the business) and making a slight loss each year, or a slight profit, say £4,000 or so, i.e., just surviving.

Not that he/she shoul deliberately be making a loss. I meant that he/she is only able to make a very small profit; say, £4000. If the money that was borrowed was from a credit card, and used to run the business, it would be a 'business-related' loan, yes?

Then, I'm suggesting that someone in this position would want to avoid having to pay any tax because he/she is already struggling to survive, and perhaps slipping slowly deeper into debt. So as long as he/she managed to make no more than £5000 p.a. profit, they wouldn't have the expenses and obligations of paying tax, yes? I think you already said "yes" in the following paragraph:

Surely, ...but I am theorising about a person who is unable to make more than £5000 profit at present... mainly due to the £5000 p.a or so that he's paying in loan interest.

But there is also the issue where such a person has not been paying any tax for several years because he/she has, every year, been below the tax-paying threshold, but then starts making more profit, but is fearful that when he starts sending in a tax return, the IR will pounce on him/her and want to know everything about his finances over the past 9 years or whatever... thus forcing him to come up with enough funds to pay an accountant to do a few weeks' work. That dread might well be anough to put him off wanting to make a bigger profit, don't you think?

Thanks for the feedback.

~MDH~

I don't think it is necessary to declare losses on a tax return in order to make them eligible to be carried forward to be set against future profits *unless* you have to fill one in anyway. So not getting a tax return doesn't bar you from accumulating losses.

However, since (below) you seem to be concentrating more on making a small (non-taxable) profit rather than an outright loss, this problem doesn't actually arise.

It's indeed plausible that that is the reason why they don't send a return to everyone as a matter of course.

I must say it's a pretty implausible scenario to be paying £5000 on credit card interest. At typical card interest rates of 20-25% that would correspond to a debt of the order of £22k and it ought to be possible to place that debt with a cheaper lender than at credit card rates, given that the business is making enough profit to service it.

But even so, what you're suggesting is that the business would be making £9k profit which reduces to £4k due to the £5k interest.

Now think: Suppose a cheaper lender could be found, who would make the interest expenditure £2k instead of £4k. This would then make the profit £6k instead of £4k, and accordingly about £1k of that would be taxable (at the starting rate band, i.e. 10%, plus 8% NI) and so about £180 of tax would be payable.

But he's paying £2k less interest, so comes out £1820 better of in terms of spending money in his pocket, i.e. *after tax* his profit would be £5820 instead of £4k. Isn't that better? It doesn't in general make sense to try to minimise the amount of tax you have to pay, even to zero, if that also means you are minimising your net income.

At the end of the day, although you are storing up losses in order to reduce future income tax, you do in fact sustain those losses in the first place! That's money down the drain paid out to credit card companies which could instead have ended upin your own pocket (minus a small part for the tax man).

Yes. But it's his business, so ultimately his money he'd be losing.

Yes. But see above. He's better off making more profit and paying some tax on it, because he would then be struggling a little less to make ends meet.

That's fair enough, but I get the impression that in your theoretical scenario the profit would creep into the taxable range if the interest could be reduced, and it would be to our hero's advantage to leave no stone unturned in his search for a cheaper lender. He might even try to borrow money from the relative he hopes to inherit from, so that the credit cards can be paid off. Then he could even offer to pay interest to his benefactor (at 5% instead of 25%, say).

There is no advantage to paying high interest rates just to pay less tax, because the interest seems to be costing more than the tax.

You don't need an accountant, but you do need to keep proper records. Even if you did have to hire an accountant, he could do nothing if you didn't keep records.

No, there is no need to live in dread of the tax man. He's very nice and understanding, provided you don't try pulling the wool over his eyes.

If you are self employed you have to complete a tax return and you have to declare any losses to carry them forward.

Thanks for your input... I know someone with credit card debts of over £50,000, borrowed on several cards and none of them are charging more than 8% APR: (I know he does some balance-juggling on a portion of it to achieve this, but about £30k of his debt is on a low interest (around 6% or 7% "for the life of the balance" (he doesn't juggle that part).

If our hypothetical person had a similar setup, do you think he'd be able to find a better deal? My guess is that if he *could* find a lender, willing to lend £50k, with a better interest rate, it would be a secured loan, which is (don't you agree?) not as nice as an unsecured loan such as credit cards - especially if the interest rate on the secured loan is not any lower. Do you agree?

One thing I personally don't like about bank loans is that they are so inflexible. I can see the appeal of credit cards (as long as the rate is low); they offer so much more flexibility, don't you agree?

~MDH~

When you run a business you should allow for preparing accounts in you business model.

If you have registered as self-employed it may well be that you will automatically receive a return, in which case you have to fill it in, and if you do that it means you have to declare your losses.

But I understand you don't have to declare your losses (yet) if you don't have to fill in a return, which if you haven't been sent one you don't have to do. In theory you might not be sent a return despite having registered. And you don't have to ask for a return in order to ensure you pay the right amount of tax if you haven't made any taxable profit.

Of course, if he hasn't received a return because he hasn't registered, then he's in trouble anyway...

Then he is very lucky or very astute or both. He's probably also got a perfect credit history and a comfortable income. None of these apply to our hero, I reckon.

It's unlikely.

That's likely.

No I do not agree, because (despite exceptions) secured rates are generally lower than unsecured rates, and it is nicer to pay less interest for the same debt (don't you agree?).

Also, if you have an unsecured loan despite having assets on which it could have been secured, this doesn't protect you from having your assets seized by bailiffs to help settle your debts if you default on the loan (after due legal process of course). So an unsecured loan is only marginally nicer (ignoring interest rate difference) than a secured one, the only difference with a secured loan being that it's easier for the lender to take your assets than with an unsecured loan.

If you have an unsecured loan because you have no assets on which it could have been secured, it probably reduces your chances of a low interest rate on it.

Yes.

Not entirely. Whilst some bank loans are subject to a fixed payment regime, not all are. The same is true of mortgages. You can arrange an overdraft, which is about as flexible as you can get.

I think he's reasonably astute. Not as savvy as you seem to be, but for a few months he tried his luck as a so-called financial advisor (or more accurately, a life insurance salesman). I think that tought him a thing or two about basic finacial stuff. More than the average layman, anyway.

I don't think he's ever missed a mortgage payment. He's never defaulted on a loan, apart from neglecting to pay his credit card payments on time, a few times each year. Does that equate to your definition of a perfect credit history? I guess it's not perfect, is it?

Definitely not. He's struggling - all the more so since interest rates started rising. I once asked if he has ever considered declaring bankruptcy and have a rest from his struggle, but to him, that would be personal defeat which would rob him of his self-respect and sort of kill his game. I think that staying abreast of his deep debt problem is one of his main motivators, if not *the* main motivator.

The latter point (about hanging on to his credit rating, and determination to stay afloat, somehow...) might.

But I keep thinking that if lending rates creep back up to 29% or whatever it was back in the early 90s, it would wipe these guys out. Especially if the housing market was in a slump too, so they can't even flog their house to keep the wolf from the door.

How likely is it that situation to occur in the coming few years - or even months - would you say?

~MDH~

No, but it's pretty good.

Was his income comfortable at the time he applied for credit?

If he sold his house, there wouldn't be a door to keep the wolf away from.

No comment.

It must happen a lot. One of the surprising facts that has come out of the debate on the identity card plans is that there are over 80 million National Insurance numbers active in the UK, despite there being only about 60 million of us living here, and certainly under 50 million old enough to work. It may _seem_ quite hard to get a new NI number issued, but in fact the Government has been very profligate with them.

What is the definition of active? A lot of people will come to the UK for a few months or more, get an NI number and then leave. These will be considered active. Other NI numbers will be used to claim benefits for the enrichment of criminals.

There's so much incompetence in government departments that I'm sure our taxes could be reduced by 75% if the Government cared about efficiency.