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Previous year small income undeclared

Previous year small income undeclared

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Client has just informed me of small income circa £1,500 in 2017/18.

I'm thinking this could be treated as casual income under 'other income'; tax will be payable because of an employment.

Does anyone know if HMRC will take a figure over the phone, like untaxed bank interest, instead of kicking off about a late Self Assessment?

Replies (15)

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RLI
By lionofludesch
04th Dec 2019 16:06

Maybe - you can only ask.

What sort of income is it ?

Have you considered claiming the £1000 trading allowance ?

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Replying to lionofludesch:
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By Gone Sailing
04th Dec 2019 16:14

It's a service.
Yes I have thought of the TA - but to me that means registering a business ?? therefore a late SA, and the penalities will dwarf the tax.

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Replying to Gone Sailing:
RLI
By lionofludesch
04th Dec 2019 16:24

Strictly, it looks like you're into penalties anyway. He has untaxed income not notified.

Give them a call and play the "my client's an idiot" card.

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Replying to Gone Sailing:
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By the_drookit_dug
04th Dec 2019 16:27

Does the TA not apply automatically, the whole idea of it being to remove the burden of submitting a tax return for those earning a little bit of sweetie money each year?

Unless expenses are over £1,000, you're looking at untaxed profits of £500.

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Replying to the_drookit_dug:
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By Gone Sailing
04th Dec 2019 16:34

Not if the income was declared under 'other income', not a trade.
Tax would be £300 versus penalties > £1,000, but this only work if HMRC will take a figure over the phone and call it a day.

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Replying to Gone Sailing:
By SteLacca
16th Dec 2019 08:58

Gone Sailing wrote:

Not if the income was declared under 'other income', not a trade.
Tax would be £300 versus penalties > £1,000, but this only work if HMRC will take a figure over the phone and call it a day.

Nope. FTN penalty, not failure to submit, so calculated as a % of PLR. With TA PLR is maximum £225 (at 45% rate). You could probably get away with careless so 0% - 30% penalty, maximum £67.50 (I'd be arguing £0), and worse case scenario is penalty of £225.

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Lone Wolf
By Lone_Wolf
04th Dec 2019 16:31

What's the tax at stake here?

Income of £1,500, assume the trading allowance can be claimed, then £500 of taxable income.

Tax of £100 for a BR taxpayer, £200 for a HR taxpayer.

Going by the CIOT guidelines, it is reasonable for a member to take no steps to advise HMRC of isolated errors where the tax effect is no more than minimal. £200 is the figure they suggest. Do the CA bodies have similar guidelines?

Is the client in SA already?

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Replying to Lone_Wolf:
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By Gone Sailing
04th Dec 2019 16:37

Lone_Wolf wrote:

Going by the CIOT guidelines, it is reasonable for a member to take no steps to advise HMRC of isolated errors where the tax effect is no more than minimal. £200 is the figure they suggest.

Is the client in SA already?

Gosh, that's new one. SA in another different trade starts 2018/19.

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Replying to Gone Sailing:
Lone Wolf
By Lone_Wolf
04th Dec 2019 16:40

Meant to link that guidance so you know I'm not spouting rubbish: https://www.tax.org.uk/professional-standards/professional-rules/profess...

If he's concerned by it, I'd include the £500 in 2019 and maybe make a note to that effect so that he's still paid the correct amount of tax (assuming he's the same marginal rate).

If he's not too concerned then I'd say just leave it be.

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Replying to Lone_Wolf:
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By Gone Sailing
04th Dec 2019 16:57

Didn't think that for second, other institutes carry the same guidance.
Many thanks.

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By Roland195
04th Dec 2019 17:00

Aside from the very good point made by Wolf that should probably be made compulsory reading for using this site, Filing penalties are only issued in the case of late returns actually issued - If you register late you still have three months from the date of issue.

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Replying to Roland195:
RLI
By lionofludesch
04th Dec 2019 17:01

What about late notification ?

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Replying to lionofludesch:
RLI
By lionofludesch
04th Dec 2019 17:02

What about all these folk who've not declared their HICBC ?

Notwithstanding the fact that most of them seem to have had their penalties suspended.

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Replying to lionofludesch:
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By Roland195
04th Dec 2019 17:38

Never seen it applied in real life living memory.

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Replying to Roland195:
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By Gone Sailing
04th Dec 2019 17:07

Aweb, a mine of information it has to be said.
This has been one of my better posts!
I have a spreadsheet stacked with Aweb/HMRC links and quotes - someone should put it online!
Yes "compulsory reading".

notalotofpeopleknowthat.co.uk is still available

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