I want to register as a self employed backdated 4 years of my client. He forgot to declare previous 4 years incomes. How it is possible and what are the tax complications and hmrc fines and penalties. Please explain in detail.
Thanks In advance
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You don't mention any figures. Is there an underpayment of tax and NI, as well as a failure to declare? That's pretty fundamental to the answer to your question.
Not in detail, but...
Penalty for not notifying HMRC of self employment.
Interest and surcharges on any amounts due on previous years' tax liabilities.
There wouldn't be any penalties for late filing of Tax Returns as there was no notification to file from HMRC.
Sorry it's brief but I'm going out.
Not much to add, really
Do hmrc give him penalty because of not register as a self employed from last 4years. Please explain me in detail. I will be very thankful to you Regards
If the client registers late, then he is liable to a penalty. I think that the penalty is tax geared and can be reduced if the taxpayer notifies HMRC rather than HMRC chasing the taxpayer.
It's all on the HMRC website.
Want detail. Give detail.
As has already been mentioned, you have not given us a lot to work with here. If you want a detailed answer to your question, you need to provide a lot more detail about what your client has done in those four years. At the very least some dates and rough profits. Do hmrc give him penalty because of not register as a self employed from last 4years. Please explain me in detail. I will be very thankful to you Regards
"There wouldn't be any penalties for late filing of Tax Returns as there was no notification to file from HMRC."
Hi Steve OH
Does it mean if someone has UTR number and submits SA for the 2012/13 tax year now, he wouldn't get penalty ? assuming no tax or NI payable on the income as his income was below tax and NI threshold.
A client of mine registered late last year and I filed 2010/11 and 2011/12 in Jan 2013. HMRC advised that the earlier year should be sent in marked "Disclosure" with a covering letter. This subsequently gave rise to a template HMRC letter about fines for failing to notify which terrified my client.
HMRC then assigned the return to a 'caseworker' who would consider the case on its merits. I argued/pleaded that as there was nil tax to pay, (client being a poor artist who was living off thin air) it would be unfair to fine him - they didn't fine him in the end.
He had notified HMRC, rather than HMRC finding him.
Hope this helps.
Is that it?
If all he has had is £800 net profit each year, then that is below the personal allowance, so no tax due. However, that raises the question of what he lived on in those four years. It's more detail, but it's not really enough.
So £160 per year PLR. Penalties I assume will only be in point for three of those years (the latest year still being in time), so £480 subject to possible tax geared penalty at, say, 30% (depends on the reason for failure and quality of the disclosure) = £144. If not deliberate you may be able to argue for suspension.