Can anyone help: self assessment + self employed tax

**B**_3

I wonder if anyone can help:
Last year i signed up to some online survey websites and thought that the right thing to do is to register as self employed.
By now all i have earned from it is about £20 (which i haven't claimed yet) and another survey website enters you into prize draws. i don't do the surveys very often.

I have a letter headed Self-employed class 2 which is asking that i pay £89. Now how on earth do they work they out?

I also have another letter which is headed self assessment Tax return and payment reminder which is asking me to do a tax return online.

This may sound silly to some but are they the same thing? I'm sure they're not but.. i just have no clue I'm afraid!

I am going to phone them tomorrow but i just wondered if anyone can it explain it to me and put my mind at ease!
Thanks

CLAPTON

well a bit unwise to register for self employment before earning any money.

however
as SE you usually have to pay class 2 NI contributions (£2.50 a week) unless you claim small earning exemption; presumbaly you did not do so

'last year' is a little unclear ; is that tax year 2010-11 or tax year 2011-12

Murdina

OK there are 2 things here both of which result from having registered.
You have told HMRC you are self-employed so they want you to do a tax return. If you have been asked to do a return you must fill it in whether on line or on paper (way too late now for that though) - it is not a choice.
All income including any PAYE goes on a return.
So register NOW to file on line and you will have till 15/2/12 to file.
The other is class 2 NICs. You need to fill out form CF10 to claim what is called the small earnings exception. You can download from HMRC website.
Once you have done your return ring up HMRC and tell them you are not really self-employed as such but get odd bits of income. They can probably deal with this through your tax code in future but you are almost certainly too late now to stop them issueing 2012 tax return so you will have to do that as well (try and do it soon after you get it not on 30/1/13 otherwise you will never get out of the loop of returns!)

**B**_3

Thankyou!!
i've registered online - will i get fined £100 because i cant do my SA until i get sent the activation code..?

John_Pierpoint

What is the date at which your self employment started?

**B**_3

it was february 2011 and i did the self employment form in march 2011

John_Pierpoint

Did you actually manage to (self) invoice anything in the (say) 6 weeks prior to the 6th of April? (I am not clear as to how your "customers" record your work and agree to pay you.)

Unfortunately this year the £100 "penalty" is for not doing the paperwork/computer work on time - not for going past 31 January with overdue tax unpaid.

When did you actually receive the self assessment forms?

**B**_3

what do you mean by self invoicing?

ugh i guess it is my fault if i do get fined, i got the forms a couple of weeks ago i think, i didn't understand it and just forgot about it.

John_Pierpoint

HMRC thinks that there are two sorts of tax paying individuals.
One is a servant employed by a master and the master should be responsible for the servant's bodily needs.
The other sort is a self employed artisan with several different customers.

Obviously this became something of a legal nonsense in the 20th century and even before then there was the anomaly of the skilled craftsman servant having to buy his own tax allowable tools.

You are in the self employed artisan camp and paying less tax overall than your activities would generate were you a servant in the employ of your customer.

So to maintain this distinction some large customers [such as Ford motor company] do their suppliers' invoicing for them.
IE "we do the paperwork and pay you what we think you are worth".
A lot of small "artisans", such as taxi drivers, prefer this self billing, as the last thing they want to do is set up a "Noddy" invoicing system of their own, when their "controller" already has all the dates and times and distances on the central computer system.

Real muddles start when these artisans go over the £73K annual turnover that makes them collectors of Value Added Tax at the point of sale. You have a bit to go before you get sucked into collecting this tax.

http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm

It seems to me that you informed HMRC of your self employed status last March, but they only got round to sending you the paperwork and demanding your National Insurance payments about 7 or 8 months later.

I have a relative in a similar situation; they wrote enclosing documentation about their new situation to the tax office that had been handling their affairs previously, only to get the information returned months later with the advice to send the information to a totally different address.
That address then turned out to be wrong so the second attempt was forwarded to a third address.
The third address then wrote enclosing not a tax return as requested, but some forms to (re)create some sort of "customer master file" for HMRC.
By now the paper deadline of 31st October had been and gone.

So my advice was to send back the master file form, the tax return down loaded from the internet and a cheque for the tax (a few hundred pounds).
So far total silence.
I will let you know how the appeal against the £100 penalty goes in due course:eek:;)

My understanding is that your self assessment tax return is only overdue 3 months after you have been told to supply one.

http://www.hmrc.gov.uk/sa/deadlines-penalties.htm