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Undeclared earnings in 10/11 - concern over registering for SA now

A few years ago I started making websites as a hobby. In July 2010, I decided to start monetising these assets in order to covering my costs. Before that tax year was over, I'd made over £1.5k (I was at college with no other income). I didn't declare this income (it didn't even cross my mind: I was concentrating on getting into university!)

In the 2011/12 tax year profits increased ten fold and I now subsequently have to complete a SA return. However, to register I have to answer the question: "When did you start working for yourself?". I'm very concerned that if I state July 2010, I will be massively fined for not completing a SA return for 10/11. Will this be the case and if so what should I do next? I want to pay tax but I don't want to get into legal problems at the same time!

I'm a UK citizen and have never dealt with tax before.

Many thanks for your time.

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02nd Nov 2012 19:00

you might get a bill

for late registration of self employment (though I've never actually seen this applied). BUT as your income/profits for 2010/11 are below your personal alowance there is no fine. I've just done two 2010/11 accounts for people in your postion with no problems - one got a refund.. Register now, send a 2010/11 return in ASAP and a 1011/12 before 31 January next.

Monetising assets... hmm, sounds complicated!

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02nd Nov 2012 19:58

RE:you might get a bill

Many thanks for your reply. I really don't want to get a bill as it looks like it would be huge: http://www.hmrc.gov.uk/sa/deadlines-penalties.htm#3

Also I had no idea you could file a late return: how does that work? Do I just register for SA, saying that I started my "business" in 2010 and they request that I complete a 2010/11 tax return along with one for 2011/12?

I think perhaps "monetising assets" is a bit of an over complication! All I meant is making stuff on the Internet make money via sales and adverts. I can tell you now that tax is far, far more complicated! It also doesn't help that a lot of the advice is completely inappropriate for someone who doesn't sell tangible goods and isn't running a business...

 

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02nd Nov 2012 19:09

Give the correct dates

but send a covering letter explaining the situation as you did above.

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02nd Nov 2012 19:59

RE:Give the correct dates

Thanks for the reply.

Who do I sent a covering letter to and when though!?

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02nd Nov 2012 20:07

Read this

http://www.hmrc.gov.uk/sa/need-tax-return.htm

 

your total income exceeds your total allowances and reliefsyou have tax to pay on this income

You can explain that you weren't self employed until 2011-2012. In 2010-2011 you felt it was just other income.

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02nd Nov 2012 21:46

Okey, thanks. I assume that I'm supposed to complete this form: http://www.hmrc.gov.uk/sa/forms/sa1.pdf, checking the box:

"I have been getting untaxed income that cannot be collected through my PAYE tax code"

and giving the exact date that I first got paid. I would send it with said covering letter and hopefully they will tell me to complete a 2010/11 tax return also?

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By AccSec
02nd Nov 2012 21:34

Untaxed Income under £2500

I am sure I have read in SA789 letters that we have received in the past for our clients, that states that if the taxpayer earns less then £2500 untaxed income, he need not complete an SA Tax Return. As you have earned less then this amount, you are probably not required to complete the SA Tax Return for 2011. Even if you state that you started in Jul 10 when you register, I think you should be able to get away from paying the £1600 penalty by citing them what they have been sending out from their office!!!

Good luck my friend.

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02nd Nov 2012 21:52

RE:Untaxed Income under £2500

Many thanks for your message. Perhaps I don't need to get so stressed about this after all!

Excuse my ignorance but I'm not sure what a SA789 letter is (I couldn't find it on the Internet or the hmrc site). I would really like to get hold of a documented that states that I shouldn't have to complete a SA return for 2010/11 so I can cite it if required.

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03rd Nov 2012 02:42

See the link - not 12

acestuff wrote:

Many thanks for your message. Perhaps I don't need to get so stressed about this after all!

Excuse my ignorance but I'm not sure what a SA789 letter is (I couldn't find it on the Internet or the hmrc site). I would really like to get hold of a documented that states that I shouldn't have to complete a SA return for 2010/11 so I can cite it if required.

http://www.hmrc.gov.uk/manuals/sammanual/sam101092.htm

Just explain what your income was in 2010-2011 and they shouldn't bother asking you to complete a tax return for that year.

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03rd Nov 2012 02:39

See the link

AccSec wrote:

I am sure I have read in SA789 letters that we have received in the past for our clients, that states that if the taxpayer earns less then £2500 untaxed income, he need not complete an SA Tax Return. As you have earned less then this amount, you are probably not required to complete the SA Tax Return for 2011. Even if you state that you started in Jul 10 when you register, I think you should be able to get away from paying the £1600 penalty by citing them what they have been sending out from their office!!!

Good luck my friend.

It says: "You'll need to complete a tax return instead if the income you receive is:

·         £10,000 or more from taxed savings and investments

·         £2,500 or more from untaxed savings and investments

·         £10,000 or more from property (before deducting allowable expenses)

·         £2,500 or more from property (after deducting allowable expenses)"

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Register from 6 April 2011

as this is the first year of chargeability, and make a white note space that you have previously carried out these activities as a hobby, and any surpluses for 2010/11 were more than covered by your personal allowances for the year.

You do have to be aware as well that National Insurance Contributions will apply from that date unless you claim small earnings exception.

 

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