Urgent help, filled in tax return wrong and owe tax

Mikeyorks

ironman1 wrote: »

By the way you are replying it seems that you believe I tried to get away with lying about earnings.

In what way would you possibly conclude that? I'm pointing out - for the 2nd time - why HMRC are chasing you for money. As you don't seem to be picking up on it. And as HMRC were going to get the employment figures direct from your employer - what sense would there be in lying about it?

If I'm curious about anything - then it's your figures. As they don't seem to make too much sense. If you're drawing the wrong conclusion from that ... then I'll leave you to it.

But if you want to put in the missing profit figure then - again for the 2nd time - someone will do a quick computation in order to spell out why HMRC are chasing you.

ironman1

I'm not sure I understand. I only worked three months self Employed last year and definitely gave the right figures on my return.

The 13000 odd they are asking about i7 from the nine months when I was on the books. Nothing to do with when I was employed. So I paid my taxes, or the firm did.

Is there anyway they believe that this 13k was earned when I was self employed?

chrismac1

Your tax return submitted was a "careless" one under the HMRC definition of that term. In my view your next move must be a careful one. You're unlikely to get any meaningful help from HMRC though it does happen occasionally. Although you think you filled in the self-employment section correctly, on the basis of the rest of this thread it seems likely to me that you didn't claim all the self-employment expenses you could have.

Get someone who knows how to do tax returns for people with CIS, and who can play hardball with HMRC if it comes to that. When they smell weakness they can be very aggressive, the worst case in my books was a mentally ill low-paid person.

HMRC had mixed his records with a guy with the same surname who ran an accountancy firm, threatening bankruptcy and driving him frantic. It took nearly a year and a complaint case to get them to back down and pay compensation.

If your next move is a good one, in my view your case can be tied up within a few months at low cost and minimal hassle. But if your next move is a blunder expect the next 12 months to be pretty nasty from the HMRC corner.

ironman1

I'm definitely using a proper accountant to deal with this and all future tax purposes.

But as I said, because I did nine months on the books and only three self employed, is there anyway HMRC may think the 13k odd I didnt declare (through honest error) was money I earned from when I was self
employed?

antonic

ironman1 wrote: »

I'm definitely using a proper accountant to deal with this and all future tax purposes.

But as I said, because I did nine months on the books and only three self employed, is there anyway HMRC may think the 13k odd I didnt declare (through honest error) was money I earned from when I was self
employed?

The Self Assessment system works on a pay now (or in your case repay now) and check later basis.

If the figures on the Return were entered in the correct boxes the computer would check them and make the repayment.

The errors you made when you filed the return online have now been identified and hence the enquiry.

You should also consider asking for an arrangement to pay the £1505 back as well as any penalties (or any amount that needs to be repaid).

jamesd

ironman1 wrote: »

By the way you are replying it seems that you believe I tried to get away with lying about earnings. All I can say is I didn't.

Nobody I've seen has suggested that. But that is how it will look to HMRC initially because they expect everyone to know all of the rules.

You'll need an accountant to check it all but it is, with the agreement of the accountant, telling HMRC why you got it wrong - thought it was just for the self-employment part - and that you're getting an accountant to check for any other mistakes. The reason for this is that there is a reduction in possible penalties for degree of cooperation and the nature of the problem - whether deliberate or inadvertent. But you also don't want to do this without doing it the way your accountant wants, hence ask the accountant first.

The reason they are after money back is because your return actually claimed a very low income for the year because it didn't include the employment income. That low income entitled you to a tax refund... which you weren't really entitled to and which they now want back, in addition to any tax due on the self-employed income.

There's minimal chance that HMRC will think that the employment income is from self-employment. The letter from HMRC specifically identifies it as £13,505 from your employer.

Mikeyorks

ironman1 wrote: »

.... and definitely gave the right figures on my return.

You clearly didn't. Otherwise how do you get £1505 tax refunded if you've only paid £950? It just can't happen ...... unless you've done previous SA Returns and had a £555 overpayment sitting on the account for at least a year. Unlikely?

So - if you didn't complete the employment pages at all ..... then the self employed figures must have been incorrect. Otherwise you would have only got £950 back. And that would have been wrong - because you had already used your personal allowance (Code 647L = £6475) in your employment. So your self employed profit (which you still haven't given) would all be chargeable at 20%.

This is (approx - as the £4752 is earnings not profit) how it should have worked :

Total income (£13505 + £4752 £18257
Less personal allowance .............. £6475
Taxable ..................................... £11782

Tax due (£11782 @ 20% ...............£2356.40
Tax paid (£1660 + £950 ................£2610
Tax overpaid and refundable .....................£253.60

But you were repaid £1505 ......... which is why you owe at least £1250. As you have to repay that 'over repayment' that you created.

Does that make it a little clearer? Although I still suspect the figures you entered on the SA Return ..... for the reasons in my first para.

ironman1

I have spoken to HMRC and explained I filled in the return wrong and my accountant is looking at it Monday. They said I could log in online and amend it to input my earnings from when I was employed. I will get the accountant to go over everything. Hopefully I'm owed tax back from last year to at least go towards my bill. As I have been self employed the whole of 2011/12.
I'm honestly an by the books fella with a young family and only me working, to be honest on poor money considering i'm 26 living in my own home in London. Believe me this has hit me hard

antonic

ironman1 wrote: »

I have spoken to HMRC and explained I filled in the return wrong and my accountant is looking at it Monday. They said I could log in online and amend it to input my earnings from when I was employed. I will get the accountant to go over everything. Hopefully I'm owed tax back from last year to at least go towards my bill. As I have been self employed the whole of 2011/12.
I'm honestly an by the books fella with a young family and only me working, to be honest on poor money considering i'm 26 living in my own home in London. Believe me this has hit me hard

I credit you for facing up to your error and I hope you get some credit from HMRC for doing so !.