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Penalties for late registration as self-employed

Penalties for late registration as self-employed

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One of our clients started her business in mid 2012 and wants to claim business expenses from that date.  However she didn't register as self
employed with HMRC until January 2013 and she is concerned that they will issue a penalty if she states in her accounts that her business started more
than 3 months before she registered with them.  Does anyone know if the 3 month submission for registering is strictly enforced and if penalties are issued?

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Euan's picture
By Euan MacLennan
22nd May 2013 14:03

3 months?

The only legal requirement to register for tax is the standard notification of chargeability to income tax set out in s.7 TMA 1970 within 6 months of the end of the tax year in which the income first arose if you have not been issued with a notice to submit a tax return.  I assume that your client has been issued with a tax return; if not, she has until 5th October 2013 to notify.

The legal requirement to register to pay Class 2 NIC after 5th April 2009 is set out in para.87A of the amended Social Security (Contributions) Regulations, SI2001/1004, and the penalties for failure in para.87B.  Basically, 87A(1) says "shall immediately notify", but 87B(1) says that a penalty is only payable where "notification has not been made by 31st January following the end of the [tax] year".  If the client is not already paying Class 2 NIC, she has until 31st January 2014 to register.

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