Registering as self employed - is it too late

dulcificum

I really don't understand how they'd ever find out when you started trading though...

paulwf

dulcificum wrote: »

I really don't understand how they'd ever find out when you started trading though...

When you start trading there will be a paper trail - you need to keep records for all expenses that you claim for and all invoices that you generate. You have to keep these for a number of years (6 years I think but don't quote me on that) and HMRC have the right to inspect them at any time.

My advice would be to consider getting a book keeper, accountant or at least advice from Business Link. You haven't met your basic legal obligations so far, and if your aim is to cover up your mistakes with lies that sets a path for the business which is only going to get you deeper in trouble. No one can be good at every aspect of running a business so get help rather than try and cover up...I outsource as much as I can! £100 isn't large in the grand scheme of things compared to what fines you could be facing.

dulcificum

Exactly - there will be a paper trail which you have control over. If you delete the records of business previously, how could they ever know?

paulwf

dulcificum wrote: »

Exactly - there will be a paper trail which you have control over. If you delete the records of business previously, how could they ever know?

That will depend on the nature of your business. For example HMRC do monitor Ebay transactions. They might also want to look at your bank statements.

If you have purchased any items when starting up you will no longer be able to submit those as expenses. Any tax credits you claim might be altered. If you have done any work for another company they could track you through the paper trail of another company...even if you sell retail another company might claim that on expenses.

I would imagine for cash transactions it might be harder to trace, but inspectors know what level of turnover to look for your records might look odd if there are 2 months wiped. If you use an accountant down the line they might question it.

At the end of the day you've got 2 choices; be honest with HMRC and hope they waive the fine or at worst pay £100 or start your new business on a foundation of deceit and risk a thorough investigation later from HMRC.

dulcificum

They might like to look at my bank statements but there's no way I'm giving them anything but redacted statements. What exactly can they compel you to disclose?

alfiesmum

The MSE site is not set up to help you break the law. Tell the truth. Then you'll sleep better at night.

paulwf

dulcificum wrote: »

They might like to look at my bank statements but there's no way I'm giving them anything but redacted statements. What exactly can they compel you to disclose?

If you don't let HMRC look at your bank statement that is going to set off huge alarm bells leading to an in depth investigation!

This is why it is important to have a proper structure in place from the start i.e. register on time and have a separate business account so you've got nothing to hide. Why would you not show them your business bank statement unless there is something fishy going on?

I will let one of the experts answer exactly what powers they have, I did see one article saying they had more power than the police!

If you keep on the right side of HMRC you've got nothing to worry about, most of the time they can be quite helpful, This is why I suggest being up front from the start, if you are having to hide your bank account to avoid a smallish chance of £100 fine problems are only going to grow down the line. The alternative is regular employment if you don't wish for the transparency that being self employed brings.

dulcificum

Appreciate the advice but I don't care if it sets off alarm bells. I pay my tax fairly. They can't have any legal right to look at my personal statements.

hethmar

Yes, they do have a right to your bank statements and even your diaries Im afraid. (And I speak as someone who had to find 6 years of PERSONAL statements for them a few years back and I was not the sort to keep them more than a year) They have the power to enter your home aswell if you run your business from there. You dont want to cross them!


"In broad terms, HMRC has power to require a person to provide information or documents which are reasonably required to check the person’s tax position. HMRC can use them before a tax return is made or without opening a formal enquiry. HMRC will have powers to inspect business premises, but not to inspect someone’s home that is not used for business."

paulwf

dulcificum wrote: »

Appreciate the advice but I don't care if it sets off alarm bells. I pay my tax fairly. They can't have any legal right to look at my personal statements.

Firstly if you keep a separate business bank account then they are going to be a lot less interested in your personal statements.

How could they ever tell if anyone is paying their taxes fairly if they couldn't check bank statements? There must be lots of cash based businesses where the money wouldn't go through the books if HMRC had no power to investigate.