Tax ignoramus needs help!

wibbler

I have a regular job which is obviously sorted out for tax contributions through my employer. However, for the best part of three years I've been getting other money coming in through web design work, mystery shopping, and affilate sales through my websites.
Now, I know very little about what I should claim for tax purposes. I haven't been earning more than £4500 in any one tax year (it's always been around £3000 to £4000). Because I have had little idea about tax issues, a lot of the income I've received (even from companies) was never logged.
So, am I being illegal, albeit completely unintentionally? If so, how do I get around not logging all the income coming in? And lastly, is there a place I can trust that tell me simply and plainly what I should claim and what I shouldn't?

ctm_2

You only get the personal allowance once, and i assume that it is used against your job. Therefore, if your total earnings in a tax year exceed the personal allowance, you will have to pay tax on them. The rules are also that ALL income should be declared.

If you do web design and charge for it then you should really be registered as self employed. You should do this within 3 months of starting. I suggest you go to an HMRC enquiry centre for further advice on what you need to do.

grumpyoldgit_2

Wibbler you have a problem!!

You should be declaring your extra income - minus costs - as it is additional to your regular job. The "below £4500" you mention is irrelevant.

You should (as you already realise) have kept records.

You probably should have registered as self employed in addition to your "normal" job

Ignorance of the law is no excuse - you need to come clean asap, find whatever records you can e.g. bank statements etc and get in touch with HMRC.

Visit the HMRC website and have a look at the personal taxation pages and questions and answers - when you have some more specific questions come back and the MSE'rs will try and help.

Search the boards for self employed etc you will find lots of info in other posts - but bear in mind the advice is general - each case wil be treated on its indivciual circumstances.

Generally HMRC are very helpful and straight forward to deal with - the straighter you are with them the better - don't worry about it but you do need to know you may well get a bill for past taxation due - that is why any records you can present will only be of help to you.

Finaly, for now you may wish to consult an accountant as they can advise you on the specifics of your case especialy the all-important expenses that you can offset income against (including the fee they charge)

GoG

wibbler

Hi grumpyoldgit and ctm,

Thanks for the info. I realise ignorance isn't an excuse - but where do you learn all this stuff, and how do you check you're not giving to much tax or too little tax? Is there a Tax Finishing School I've missed out on?!

ctm_2

wibbler wrote:

Hi grumpyoldgit and ctm,

Thanks for the info. I realise ignorance isn't an excuse - but where do you learn all this stuff, and how do you check you're not giving to much tax or too little tax? Is there a Tax Finishing School I've missed out on?!

Unfortunately there is no tax finishing school!! I'm of the opinion that you everyone should have a few hours teaching in their final year of school giving them some idea as to how our tax system works, and other financial things.

If you don't know something HMRC expect you to contact them for advice.

Every year, on the P60 you get from your employer is the statement similar to: 'You should tell the Inland Revenue of all income.....' which is one way they expect you to know that you should declare all income

Cook_County

Wibbler:

I agree with all of the previous posts.

Your website says that you have been going in some fashion since 1997. You design websites (I like yours, it is very clear), you also participate in BNI and other B2B marketing so I doubt you can claim entire ignorance of income tax.

You have a problem in that you have (in HMRCs eyes) evaded tax. They will tell you that they can impose penalties equal to 100% per cent of the tax due, plus interest. In practice in view of the amounts involved and assuming you voluntarily disclose you will probably get away with paying the tax due for past years plus - say - 25% to 30% in penalties and interest.

The amounts will probably not be huge but your first task for the New Year is to construct lists on income and expenses for each year. Do estimate if need be, but going back through computer records, bank statements etc will be vital.

Next step? If you deliberately evaded tax see a solicitor as this is a criminal offence. If there was a genuine error and no intention to evade then see an accountant. Do be aware that an accountant will most probably automatically report your existence to the National Criminal Intelligence Service (although they cannot and will not tip you off) because if they suspect you could conceivably have deliberately evaded tax this is a mandatory procedure for them.

I would get this organised by mid-January at the latest as volunteering your existence to HMRC sooner is the right thing to do. Someone in your BNI chapter will be able to refer you to a local accountant.

Seperately, you need to pay Class 2 NIC backdated to your start date; even if you qualify for exception or deferment in future tax years.

grumpyoldgit_2

Sorry to rub salt.........
If MSE'rs can find you it would be naieve to think HMRC won't - this is a public forum

GoG

wibbler

Thanks for all the advice - I'll get cracking on the income/expenditure now. BTW, what is a BNI chapter, Cook_County?