Just found out I owe tax - I'm afraid of the fine

macmomo

Ok I genuinely didn't think I had to do a tax return. I understand ignorance is no defence but now I'm terrified. I owe about £3000 in income tax, going back to FY07/08. I will apply for a self assessment letter tomorrow but - how much will they fine me? And how long will I be given to find the money to pay the fine?

Mikeyorks

Your post doesn't add up. How do you know you owe £3k for 07-08 if you haven't done an SA return?

Are you PAYE?

macmomo

Yes. I'm armed forces and was relocated (not voluntarily) to the other side of the country. I rented my house out and had to rent another one for myself and family in new location. I thought (assumed) that the rent i pay was a cost that could be offset against the rental income - by which calculation I am out of pocket (I get about £100 more per month in rent than I pay but have spent a lot on repairs). So I didn't think I owed any. Then I mentioned this in work the other day and people corrected me. I have never had even a parking fine or a speeding ticket in my life. I want to pay what I owe, but - will they fine me thousands for taking so long to work it out?

Annisele

HMRC publishes details of its current deadlines and penalties (new rules) and its old ones

I think - but I'm not an expert - that you'll have to pay interest, and then maybe another 5% or 10% of the tax you should have paid.

macmomo

Thanks for that. Do you know if they will aggregate it? last year we definitely made a significant loss. The website mentions £60 a day fines. Is the 5-10% you mention the fine? I'm trying to understand the website but finding myself a little overwhelmed.

jimmo

It is most unlikely at present that you will face penalties for late Returns. Returns cannot be late until some time after they have been issued.
You will however face penalties for Failure to Notify Liability.
http://www.hmrc.gov.uk/about/new-penalties/failure-to-notify.pdf
Note especially the part headed “What can I do to reduce a failure to notify penalty.”
If you are happy with your figures contact HMRC and confess.
If you need professional advice get it now and don’t contact HMRC. Get your professional to deal with HMRC.

macmomo

Thanks again - i will certainly call and tell hmrc, I can't afford a professional to help. I hold they will allow a few months to pay the fine. Not sure how I'm going to find the £3000 either yet.

PlutoinCapricorn

You may get some penalty relief by reporting yourself, and HMRC may well accept a payment plan.

agrinnall

macmomo wrote: »

Thanks again - i will certainly call and tell hmrc, I can't afford a professional to help. I hold they will allow a few months to pay the fine. Not sure how I'm going to find the £3000 either yet.

I think you are looking at this wrong, my view is that you can't NOT afford a professional to help. It's clear that you don't really understand what expenses are allowable against your rental income, and it's no good relying on what some random people at work tell you. At the very least you should try to get an initial consultation with an accountant, which many people say can be obtained for free, to look at your figures and supporting documentation to see if your calculations are correct.

richard72

As said above, most accountants will give a free 1st consultation, Im no expert on your situation in any way, but the fact you missed it means you probably know less than me and I know very little about it.
Contacting HMRC first would be a Big BIG mistake.

jamesd

Get an accountant. There may well be expenses that you haven't noticed or that you have handled wrongly. It's very likely that the accountant will save more than the cost.