Late SA for a CIS Subcontractor

Late SA for a CIS Subcontractor

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hi Guys

I am helping out a good friend with his expenses, etc for a CIS SAR return. I am new to this but think I can do it with a good deal of research which i have started to do in the last few weeks.

He has not submitted a Self assessment since he started as Self employed subcontractor fitting kitchens in 2009. Thankfully, he has been fully registered for CIS and his contractor deducts the 20% on all invoices submitted since then he just has never deducted any expenses so we think he is due a little bit back somewhere along the line

However, I have a quick question, the HMRC lines are busy and i cant get through.

As he is filing VERY late BUT has paid his tax already would he be fined for the late submission, if you see what I mean? If he is to be fined then looking at the penalties then it seems to not be worth doing it, I could be monumentally wrong here off course but can seem to find the answer to this one anywhere

Many thanks in advance

Steve

Replies (28)

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By garethbotterill
11th Jan 2014 16:23

Fixed penalties from 2011
I think it was for the year ended 5 April 2011 when late filing penalties became fixed, before this it was limited to the lower of £100 or the tax owed.

This means that your 5 April 2011 and 5 April 2012 will be into considerable daily penalties.

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By SteveBailey
11th Jan 2014 16:27

thanks Gareth, I saw they were "silly" BUT what I am asking is, he has paid his CIS tax so why would he be fined for a SAR where no tax is due or owed/late, etc

I can understand if he was "in trouble" for not paying but he has already paid, HMRC owe him not the other way around

thanks again though

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By garethbotterill
11th Jan 2014 16:36

Tax paid doesn't affect the penalties any longer
This used to be the beauty of the old legislation when penalties were reduced to nil because the tax had been paid but I'm afraid it doesn't work that way now.

He's probably looking at fines of £1,000 plus for each of 2011 and 2012

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By Marion Hayes
11th Jan 2014 16:49

Ambiguous

I am not sure I agree with the above in these circumstances.

This is a failure to notify. No returns or UTR have yet been issued I assume.

Therefore, once issued the filing deadline kicks in so I think you have 3 months to file.

Penalties for failing to notify are all tax geared so if there really is no liability outstanding on the calculations then there can be no penalty?

Rebecca Benneyworth  is the one to ask - I seem to remember she did a comprehensive summary on here when the new penalty systems were kicking in. Someone may have flagged it and have the link please?

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By garethbotterill
11th Jan 2014 16:54

If he's registered for CIS under 20% deduction
Then hasn't he also registered for self assessment?

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By SteveBailey
11th Jan 2014 16:58

Thanks again Gareth

very cheeky indeed. basically paying for their time then or should I say, paying for the automated systems time to process it, very unfair.

OK, so no way around that. it is just gonna take so much time to go through 3/5 years worth of receipts, etc. He has been relatively good and keep everything together, keeps his receipts in each "invoice/job envelope"

Just a quick couple more questions 

When you say 2011 & 2012 do you mean 10/11 and 11/12 tax years?

and due to the impending deadline can I submit last years first and then submit previous years afterwards. My mother, who does accounts and payroll self employed funnily enough, for 20 years or more say I have to do them all in date order? if I have to do thsi then i have to do a helluva lot of work now before the 31st

thanks again

Steve

 

 

 

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By SteveBailey
11th Jan 2014 17:01

Oh, I missed these 2 replies

He has never registered for SA. HMRC do not know where is atm but he wants to get this all sorted now, good job he CIS registered.

 

 

 

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By SteveBailey
11th Jan 2014 17:01

He has UTR through his Contractor

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By ShirleyM
11th Jan 2014 17:12

He is registered

If he has a UTR, and is getting 20% deductions (not 30%), then he is registered for self-employment.

You need to find out whether he has received a notice to file for any year. If so, then the penalties for 11 & 12 will stand at around £1300 each year.

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By SteveBailey
11th Jan 2014 17:17

Thanks Shirley

unfortunately he has moved so many times since the address the HMRC has and tbh I strongly suspect they sent Notice to File there. He says that the people that live there now very probably sent them or anything back return to sender. 

Does the amount of moving about count for anything?

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By ShirleyM
11th Jan 2014 17:23

No, Steve

It is his responsibility to inform HMRC of his new address, not HMRC's responsibility to track him down.

He may not have penalties for the years before 2011 though, so it could have been worse, and if he fesses up before they do track him down, then it will go in his favour.

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By SteveBailey
11th Jan 2014 17:29

I agree

Thanks Shirley

Yeah, I just said the same thing to him ;)

Yeah, he/we are working on the basis of getting it all done in one big pile then submitting in one go and getting it all sorted in one go and out of the way and perfect form then onwards as he is losing so much in unclaimed expenses

Do you mean 10/11 tax year or 11/12 year when you says 2011?

and do I have to submit them all in order strictly or can i submit this year first then do the old ones after? 

 

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By ShirleyM
11th Jan 2014 17:37

Do 2013 first

2013 means 2012/13, and so on.

You won't get all the tax refunded. He is out of time on the earlier ones, so I would submit the last three years and then wait to see if they ask for earlier ones.

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Replying to lionofludesch:
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By razertoo
14th Jan 2014 17:12

I wouldn't wait....

ShirleyM wrote:

2013 means 2012/13, and so on.

You won't get all the tax refunded. He is out of time on the earlier ones, so I would submit the last three years and then wait to see if they ask for earlier ones.

I would still submit the earlier returns before HMRC issue determinations of tax due. Once they are issued for periods where the last filing date has passed those determinations will sand, even if the return shows a nil liability or a refund due.

 

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By SteveBailey
11th Jan 2014 17:44

Thanks Shirley, I thought so

I shall concentrate on this last year first then and go form there do the 2 before after

Thank you very much for the help and everyone else too, I love these sorts of places, perfect!! :)

Now to go sift through all the types of expenses, etc..... 

 

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By Marion Hayes
11th Jan 2014 19:23

Not convinced

he is registered for self assessment. Is he paying class 2?

If done through contractor that long ago will not necessarily have been verified etc.

Do you know his UTR? If so a quick call to check where to send 64-8 will not trigger any interest but will let you know if there are any returns issued.

Plus, if he can show he had notified change of address in some way returns were not issued validly and he could have them cancelled. Just don't tell them current address before making them write to you confirming addresses used. Once it is updated the history is lost.

I agree with Shirley that you start with 2012/13, then do 2009/10 (goes out of date on 5/4/2014), then 2011/12. I doubt there will be much in the way of capital allowances to worry about.

 

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By SteveBailey
12th Jan 2014 17:03

thanks

Hi Marion

thanks for the reply

He is not registered for self assessment, he has done nothing about an SAR since going S/E, basically done nothing but get paid.

He has not paid Class 2 and has a letter asking for it that he got from the old house.

Yes, I have his UTR. So, if I call them and give his UTR and "Ask where to send a 64-8" this will help in some way?

yes, I have is receipts for all the goods he has bought and diesel and such like to deduct to get his Net, I was going to try and go into more detail for other things like laundry, etc but time is of the essence I think here. I have started preparing 2013 now ready then will do that after these enquiries have been resolved and before the 31st.

 

 

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By Marion Hayes
12th Jan 2014 18:43

Failure to notify

If you are sure he did not register for self assessment then the penalties are calculated on tax due. If a return was not issued then he can't be late filing.

Submit his details online for authorisation - I assume you have commercial software? That will let you file the returns online as long as you know the UTR.

I would just do the returns in the order Shirley suggested, submit them online, and wait for the response. Explain to him that you are not sure what their response will be.

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By SteveBailey
12th Jan 2014 19:47

Hi Marion, thanks again

Yes, very sure, he has done nothing at all.

When you say tax due, if no Tax is due (as he has paid ongoing) then will there be no penalties? I suppose this "return not issued" will become clear when I call and ask the question above, yes? 

As for the commercial software then that raises as interesting thing, I am a lowly friend helping him out and do not have any software (but have seen things mentioned on the HMRC site) it appears I have wrongly assumed that it is something I can just log in and submit myself?

thanks

Steve

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Replying to 356B:
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By Minnie136
12th Jan 2014 21:41

Online login

Steve, you will need to request an online login to enable you or your friend to submit the returns online.  Request this as soon as possible as it takes at least 7 days to arrive.  Go into the self-assessment section on HMRC site and you will need to enter your friend's UTR.  HMRC will need an up to date address to send the code so you may need to change the address first.  Obviously make sure that you have permission from your friend to login as him and submit the returns.  How are you going to assess whether the expenses are deductible or not?  Are you sure you can do this yourself or would your friend be better off getting an accountant to help out to ensure that the expenses are correctly claimed and to minimise penalties.  Also make sure you gross up the CIS income on the return.

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By SteveBailey
13th Jan 2014 02:29

Thanks Minnie

I have just done the registration for self employment/self assessment and will do the 64-8 as well, I saw that so will print off and get him to sign it, etc

So, I have/he has to await for the user ID and password now then I guess and we can go from there

Yes, I can get by on basics now with regards to expenses. i have been reading up on it a lot over the last few weeks and will keep it simple to start, just his work diesel and materials used, van expenses. I will learn the other stuff as I go like laundry, business mobile, bank changes

Once this is out of the way he will do a online service like Clearbooks or something

Thanks

Steve

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By jonsa
14th Jan 2014 12:27

SA

You state he is not registered for SA, but he must be as he has a UTR and only 20% CIS deductions.  You also seem to think that CIS deductions cater for his liabilities and nothing more need be done.  You mention that it may not be worth doing the tax returns and there you miss the point.  CIS is just a way to collect some tax on account.  The rules for tax returns apply to all self-employed, CIS or not.

 

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By Marion Hayes
14th Jan 2014 14:37

SA

Having a UTR does not mean he is registered - just that at some point he has been issued a UTR. It certainly doesn't mean a return was issued. Sadly, a deduction of 20% does not necessarily mean the contractor has verified him and is doing it right.

You are right that the tax deducted does not always cover liability. It depends how much you are earning.

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Replying to Locutus:
By jonsa
14th Jan 2014 15:41

SA

OK Marion, I was assuming he has been verified by the contractor, which also means he is registered.

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By SteveBailey
14th Jan 2014 19:10

thanks everyone

He has just found the letter from HMRC stating that he should be completing a tax return each year, they will let him know which tax return to complete and when by, etc

So, it looks like he's is already registered at that time, Sept 09. However, he moved out of that address in the following April and in that time did not ever receive a return to complete. They also got his surname wrong at the beginning too

When is a return sent, after the end of the tax year or before? He says he collected mail from the house for a period after but does not know for sure for how long.

I have the 64-8 form to send in and we await the user id/password. More will become when i can actually speak with them and see what the state of it all is, in the next couple of days I expect.

I will also ask them which order to do it in to and defer to their advice

regards
Steve

 

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By Marion Hayes
15th Jan 2014 08:53

Take Shirley's advice

It will take more than a couple of days for the reference to arrive Steve.

In the meantime take Shirley's advice. Do the three returns and submit them soonest.

If he was issued returns on 6th April each year then going past another 31 January increases the penalties, but a wrong name and old address increases the possibility that the notices were invalid.

 HMRC will not be thinking of all the consequences when you talk to them and they are under no obligation to tell you things in your friends favour.

 

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By SteveBailey
15th Jan 2014 22:02

Thanks Marion and everyone

Finally got through to the SA helpline and had a good chat with a guy there with some great news too.

He said always in year order so I will start with 09/10, which I have all invoices and receipts and P45 laid out and totalled already. So, will be submitting that when the activation code comes through and I am in the process of getting the other years in line too. I'll keep it simple and just to fuel/materials expenses for now until I can learn more. He has, bank charges, phone, tools, laundry, office, my time to reflect I'm sure

I asked about the state of the account with regard to penalties and he went away and came back saying that only penalties for 09/10 are lodged and none after that as they did not have a valid address for him!!!!! I did ask will then retrospectively re-apply the penalties, he said no.

My friend was was very happy indeed as long as it sticks off course.

Shall let you know how it all goes and pop i for the off question I'm sure when i have to file, the Demo looked good but had shed loads if info that looked complicated! lol 

Thanks again

Steve

 

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By ShirleyM
16th Jan 2014 08:18

Good luck!

Like Marion, I know the helplines often give incorrect advice, but hopefully you got the name of the HMRC employee, and recorded the date/time of the call.

Please return to let us know what the final penalty situation turns out to be, as I suspect it will not be as advised.

 

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