Self employment/tax question

musehead

Over the summer I made approx £4000 by doing some self employed "consultancy" work, which was essentially doing bookie/casino bonus offers for people and splitting the profits. I sent a letter to the IR in late July to ask about tax, because I wasn't sure if it was payable (since it is gambling) or how I should go about paying it.

I received a reply last week saying that I need to register myself as self employed for consultancy work to pay tax/NI on this income. They have sent me a form to register as self employed.

However, I no longer have this source of income since I stopped doing it earlier in the year. Do I still need to register as self employed even though I no longer am?

There is also a fine for not registering as self employed within three months - but I think I may be able to appeal against this as the IR took so long to reply.

I do not have a job (i'm a student) although I have income from a trust fund which will push my total income above the tax-free bracket.

Thanks very much in advance!

Tallymanjohn

If you earned it after April '06 then you will need to include it in your next Self Assessment form which you should get soon after April '07. I'm assuming you already complete a SA tax form for your trust-fund income, if not I believe you should be even if you don't actually receive enough to normally pay tax. Anyway, once you include all earnings etc. in the next form, as long as you complete & return it by Sept. '07 the IR will tell you how much tax is due to be paid at the end of December '07. You will need to register as self-employed and then un-register separately otherwise the IR will also assess you on potential earnings for the following year of which you would normally have to pay half at the same time (Dec '07). It's well worth discussing it with your local tax office so you get it right, as they are much more helpful if you keep them informed of the situation rather than, apparently, ignoring it.

musehead

Yes, I have been filling in a SA form the last few years for the trust fund income, although i've not had to pay tax before.

So basically I need to register as self employed, then fill in the SA form for the 06/07 year in April, then unregister myself after that?

I'm expecting a net refund in tax because the trust fund has already been taxed 40%, which in previous years has all been refunded to me.

Petmidget

I would personally stop right there. Are you sure you want to disclose this as earned income and not treat it as gaming winnings (gambling).

I assume you used your "partners" money for seed and then used the variety of gambling bonuses that online casinos use to ramp up additional funds, withdraw and split.

It may be that you didnt personally stake any funds but that would be next to impossible to prove and I would certainly treat this as gaming income if it were me personally.

In fact I have done similar but using my own money, never risked a penny made a reasonable return (200% in 14 days, better than a bank) but I have no intention of treating it as anything other than gambling.

In general terms any money earned by 1 person is tax deductable by another assuming they are a business person. This isnt the case here. In this case you have gambled on someones behalf and made them money, this is tax fee to them. As a consequence of them winning they have "given" you a share of the winnings. A GIFT surely.

My mate gives me a horse racing tip, I win £200 I give him £20 as a thank you for good tip. Is it income, no its a gift.

But the decision is yours.

I think i waffled a bit here, very tired. but I hope that all makes sense

musehead

The only difference from what you've said is that I actually used my money to fund their gambling. I'm not sure if that changes anything.

I've got no problem with paying tax on the income - just want to do that is right!

Petmidget

musehead wrote:

The only difference from what you've said is that I actually used my money to fund their gambling. I'm not sure if that changes anything.

I've got no problem with paying tax on the income - just want to do that is right!

If you used your money, then why were you splitting it with anyone? I assume to use their cards etc as casino's tend to track individuals to stop them repeatedly using the same offers.

And if it was your money then it is clearly gaming winnings IMO.

It is possible if you were not clear in your letter to HMRC then they might have got wrong end of the stick and instructed you to register, I would contact them to clarify.

No point in paying tax if you dont have to.

A few more bevvies down the SU :T