Declaring untaxed earnings for the previous year

mattdrummer

Hi,

Just a quick query - I've had a look at the stickies and this seems to be the best place for it. If I'm wrong, please let me know! The query is...


If someone didn't declare some earnings in the last financial year - out of forgetfulness, disorganisation or whatever - but would now like to get everything in order:

1. how would they go about it?
2. what penalties would they face?

Any advice greatfully appreciated!


Matt

whitewitch21

You don't say what sort of earnings. You should register for self employment within 3 months of starting. I would recommend putting all the information in writing to HMRC with relevant P60s etc and ask them to assess your tax liablity. If you were self employed however you will need to complete a self assessment return for 2008/09. It might be worth a phone call to HMRC and get the ball rolling.

fengirl_2

You have until 31 Jan 2010 to declare untaxed income for the last financial year. Failure to do so means a £100 fine, plus interest, plus a penalty of up to 100% of the tax due (reduced according to co-operation, amount of tax, etc etc.)
You go about declaring income by asking HMRC for a self assessment for the year.

Rolo_Tomasi

The first thing to do is to write to your local tax office explaining the type of income you have not declared and when it was received. They will then advise as to whether you need to complete a Tax Return.

Interest will always be charged on underdeclared tax and a penalty may also be charged. The amount of the penalty depends largely on the amount of unpaid tax. If its only a few hundred pound then quite often no penalty is charged. If its more then then penalty can be up to 100% of the tax not paid.

Just one other point. There is currently an amnesty running for undeclared offshore income where the penalty is caped at 10% (I think). When something similar was run a few years ago the Revenue agreed to treat undeclared UK income under the same rules so they may do the same this time.

dori2o

Phone the tax office, explain what the income is, if it was a one off income, i.e.it is not likely to continue,and it is below certain limits, they may simply ask that you write to them to advise so an informal assessment can be issued.

If it is a permanent income that is likely to continue, then you may need to register as self employed,and then have to complete a tax return.

mattdrummer

Many thanks guys, I appreciate it.

The earnings in question would be for around 4 ad hoc pieces of consultancy work, for someone whose main income is now, and was previously, on a payroll. At the time, however, the consultancy work was their only income.

fengirl_2

They need to look at their income for the whole tax year. If the consultancy plus any employed earnings and/or JSA bring them over the tax threshold, they need to self assess. If their total income was under the 5745 limit and they paid tax on their pay, they may be due a refund.