Not been declaring

Sw0rdfish

I am a self employed family man, who for the last 3 years has been doing a second job as a Taxi Driver. The 2nd job as a Taxi driver is something I tend to do on weekends. A rough estimate for earnings, would be that I have made around £4k a year. Quite stupidly I have not declared none of this, initially I thought I would probably only do the 2nd job for a few months and would not bother declaring (illegal I know). But with money problems I have had to continue and guess will have to for a few more years.
I know I have probably come across as a bit of an “idiot” – but I am genuinely scared/concerned about this, I have a clean record and never been involved with anything illegal, plus the fact I have 2 small children.
Anyway I don’t really know a lot about the tax system, mainly as I have always been “employed”. The plan (for financial reasons) was to declare this year on January (I think this is the date it has to be done). Therefore not to mention the last 2 years.
Can someone please advise if I will be making a bigger mistake by only declaring this year? Or will this cause the taxman to investigate further and realise I have been working this 2nd job for 3 years. Any advise would be gratefully received.
[EMAIL="amberavneet1@yahoo.co.uk"][/EMAIL]

fengirl_2

The return which has to be filed by 31 Jan this year relates to income for the year ended 5/4/08. However, if you suddenly declared income as having commenced on 6/4/07, HMRC would investigate you as you have to notify chargeability within 3 months of starting. You would be charged a penalty of £100 for late notification. Can you prove you only started driving during 07-08? HMRC can ask the local authority when your licence was granted.
No one on here is going to suggest you fail to declare all these earnings. If you do declare all the years you have been driving, HMRC can charge a penalty of up to 100% of the tax due, plus interest going back to when the tax was originally payable. Also, taxi drivers are an Inspector of Taxes' dream - cash income and no records - ideal for a thorough investigation into a driver's affairs.

july73

fengirl wrote: »

The return which has to be filed by 31 Jan this year relates to income for the year ended 5/4/08. However, if you suddenly declared income as having commenced on 6/4/07, HMRC would investigate you as you have to notify chargeability within 3 months of starting. You would be charged a penalty of £100 for late notification. Can you prove you only started driving during 07-08? HMRC can ask the local authority when your licence was granted.
No one on here is going to suggest you fail to declare all these earnings. If you do declare all the years you have been driving, HMRC can charge a penalty of up to 100% of the tax due, plus interest going back to when the tax was originally payable. Also, taxi drivers are an Inspector of Taxes' dream - cash income and no records - ideal for a thorough investigation into a driver's affairs.

This poster is right, but I have known other people who have been in this situation and I think the best thing to do is get an accountant. That would cost you a lot of money, as a lot to sort out. but you can get ones that will charge you by year and by direct debit monthly. So no matter how much work they need to do it will only cost you per year and not by the hour. Just a thought and then they can help get you through all the legal stuff and as I've seen before can reduce penalties from HMRC. If you do it DIY style, then it will be so stressful and you will not know all the loopholes that can be used. Also they can use Lot's of tax deductible stuff to reduce your tax bill legally, But there will still be penalties to pay unfortunately. Also and I don't want to worry you, but pleased be prepared to have up to April 2008 tax paid by 31st Jan 09 plus half of April 2007 to April 2008 tax bill to payed on account. This on account will be payment towards April 2008 to 2009 tax. Hope that makes sense.

But I think just a chat before you sign up with an accountant will show you what they can do and it is a free consultation to see if you'd like to sign up. So may be worth booking in a few and see who can offer you the best deal and advice based on your circumstances.

Good luck and I hope you get it sorted.

Just to add if you have an accountant it tends to take OFF the red warning flag with HMRC, as they look at it as being dealt with properly, unlike if you do it yourself and they start spotting mistakes etc when you do it yourself. Which would not be wanted in your present situation, as again it will only cause you more stress and worry.

trevormax

Also, accountancy fees can be deducted from your profit to reduce your tax liability.

If you decide to declare only one year when you have been doing it for three, this will cause problems if found by HMRC as you are deliberately concealing information which they dont like. I would not suggest trying to hide it and consider seeking out some advise from an accountant/tax consultant.

july73

trevormax wrote: »

Also, accountancy fees can be deducted from your profit to reduce your tax liability.

If you decide to declare only one year when you have been doing it for three, this will cause problems if found by HMRC as you are deliberately concealing information which they dont like. I would not suggest trying to hide it and consider seeking out some advise from an accountant/tax consultant.

Yes please don't go down the route of not declaring all the years you've been working self employed. It will land you in all sorts of trouble. It is possible to sort out, so deal with it sooner rather than later.

Sw0rdfish

Point taken - will need to look out for an accountant or stop doing this 2nd job.

swanny65

Two points.
Even if you stop now the HRMC may trace you if they undertake a proactive check of taxi drivers in your area.
Best to come clean. If your earnings are only £4000.00 pa then the tax owed will be low if you claim the relevant business expenses. Therefore even after all the penalties are applied it shouldn't be to bad.

fernliebee

fengirl wrote: »

The return which has to be filed by 31 Jan this year relates to income for the year ended 5/4/08. However, if you suddenly declared income as having commenced on 6/4/07, HMRC would investigate you as you have to notify chargeability within 3 months of starting. You would be charged a penalty of £100 for late notification. Can you prove you only started driving during 07-08? HMRC can ask the local authority when your licence was granted.
No one on here is going to suggest you fail to declare all these earnings. If you do declare all the years you have been driving, HMRC can charge a penalty of up to 100% of the tax due, plus interest going back to when the tax was originally payable. Also, taxi drivers are an Inspector of Taxes' dream - cash income and no records - ideal for a thorough investigation into a driver's affairs.

Depends on your earnings I think. If you can prove ie with your accounts that you earned under the threshold then they don't require the payment. You have to wait for the penalty letter to come through, then fill in the form attached and send a copy of your books too as proof of earnings.

Doesn't really help with your dilemma though sorry.

System

fernliebee wrote: »

Depends on your earnings I think. If you can prove ie with your accounts that you earned under the threshold then they don't require the payment. You have to wait for the penalty letter to come through, then fill in the form attached and send a copy of your books too as proof of earnings.

Doesn't really help with your dilemma though sorry.

OP stated the taxi driving is his second job so it's likely that he has used up his tax free allowance and 10% tax band with his first job therefore tax at 22% would be liable on his self-employed profits and the £100 penalties would stand.

Susan_Frost

Hey, the thing to do is DONT PANIC. You wont go to court, or be put in prison, the tax office just want what is owed, and a bit more for having had to wait.

But the above advice is all good, get an accountant, and if you get your payments in by 31st Jan you will save £100 one years penalties - go past and that's another £100. And if you need the second job, then dont chuck it in just because you have to pay tax. Remember what the extra income brings you. OK, they take 22% AFTER expenses have been paid. But that leaves you with 78%. And if you are skint, then why give it up.

You will have established yourself in the three years and who knows how your main job will go in this credit crunch. Bite the bullet. Get it done. You'll be less stressed afterwards, I promise. You've probably been worrying for three years about this. Who might find out, who might shop you. Yes ??Good on you for your enterprise and finding the work.

Once sorted, forget it. Good luck

david69_2

good on you for being honest which is more than can be said for alot of people