Tax returns not filed, what reporting requirements

New client has not filed 6 years of TRs. Above NIC threshold but below PA.

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A new client has asked for my assistance to regularise his tax position.  Initial indications are that his turnover each year has been about £20-25,000 and his profit has mostly been above the NIC threshold but below the personal allowance.  HMRC have not requested TRs.  I will be looking at the exact figures next week.  It appears that the client is happy to pay his IT and NICs, but it would be useful if we could minimise the penalties.

As per regular advice on Accounting Web s7 TMA 1970 says that he did not have a notification requirement unless he had an income tax liability.  Is there a mechanism to report and pay class 2 and 4 NIC without filing income tax returns?  

Also does anyone have any suggestions on how to deal with the years if it is concluded that tax returns are not due?  For example if registration for self-employment is done online it asks for the date of commencement, and if 1.6.13 is given then requests for the last 4 years of tax returns will be issued.  However we may want to avoid having to file some of these tax returns if there is no income tax liability.  Is filing paper returns for the tax paying years the way to do it, and to ignore the years when no liability exists?

Advice much appreciated on what has to be done, both legally and practically.

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Jerome lane stewart and co
By Jerome Lane
07th Aug 2019 02:00

HMRC will require returns from date of registration as self employed; you can’t skip years but you can start at first year a liability arose. If no income tax liability, then class 2 can be paid for up to 6 years without needing to do returns. The class 4 bit will depend on liabilities and you may have to take a view but the chances are HMRC will insist on getting tax returns. It’ll be easier to call once you’ve confirmed the amounts involved. It’d seem pretty pointless creating a song and dance over tiny amounts but at least you’ll protect up to 6 years of NIC for your client. Good luck!

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Jane
By Jane Evans
07th Aug 2019 09:56

Thank you
I'll see the figures next week and then we'll work out what to do.

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