Wonder can someone comment on this!

Wonder can someone comment on this!

Didn't find your answer?

for 06/07. I was issued a P45 in Jan 06. However, I continued working and receiving income from the same company (my previous employer) afterwards till Oct 06 when I formed a company. I did not pay any tax and NI on the earnings from Feb 06 - Oct 06 and did not disclose this income in my tax return for 06/07. My questions are as follow:

1: How should I treat my earning from Feb 06 - Oct 06? I did not register as self employed with HMRC ever. Can I put it in other income?

2: what kind of financial burden I have to bear in addition to paying the outstanding tax?

3: Any other issue?

Regards

Replies (5)

Please login or register to join the discussion.

avatar
By occca
05th Mar 2010 22:13

You need to declare as self employed income

You were self employed for a period of 9 months and you need to declare this in the correct years.

Therefore, you need to put Feb to 5 April 2006 in to your 2006 tax return and 6 April 2006 to Oct 2006 in your 2006 tax return

Tax and NI will be due on the profits made and there is likely to now be penalties and interest to pay too

 

 

Thanks (0)
avatar
By User deleted
07th Mar 2010 16:02

you may have been employed

if the relatinship didn't change substantively, you are likely to have still been employed.  in that case, they should have deducted paye & ni, but if they didn't and you knowingly failed to provide a p45/p46 you could be found to be liable, as happened recently in the burton case.

Thanks (0)
avatar
By User deleted
07th Mar 2010 18:25

the employer is liable

not the employee for NI (unless the employee was trading through a ltd) if the employee is self employed (but really employed)

Thanks (0)
avatar
By nogammonsinanundoubledgame
08th Mar 2010 06:13

A few additional comments

Whether your income was employment, self employment, or casual income is a question that rests on the facts.  If it was employment, which it may have been (but no-one here can comment) then you have to consider whether the amount received was in fact net of PAYE.  From the tenor of your post I assume not.  That being the case the employer had a responsibility to report the income and deduct and remit PAYE, and HMRC may seek that route.  That does not however absolve you of an independent requirement to report the income under s.7 or s.8 TMA 1970 depending on whether or not you have been served with a tax return for that year, and you may expect to be independently liable for the tax, penalties or interest.  Penalties would be determined under the "old" rules and prompt and complete disclosure and co-operation will mitigate the position, possibly to £nil (although interest will still be exigible).

Assuming for the moment that you were not employed, the distinction between self employed and casual earnings may be worthy of examination.  If you can sustain an argument that the activity did not amount to self employment or employment then you might be able to escape the NIC consequences that would apply to self employment, but you may also be more restricted in the deductions that you could claim in quantifying the taxable amount.

You mention amending your 2006-07 tax return.  Unless the original return was served on you exceptionally late then you are out of time for amending the return by repair.  Technically you are into the "error or mistake" provisions and HMRC would collect the duties by way of discovery assessment.  I suppose that you can make the disclosure by way of a tax return form.

You don't mention submitting an amendment for 2005-06.  Given that the additional income appears to have arisen initially in that year you may wish to consider whether this is appropriate.

With kind regards

Clint Westwood

Thanks (0)
avatar
By User deleted
08th Mar 2010 18:07

dont declare it!

dont declare it

Thanks (0)