Oops, I've failed to tell HMRC I'm self employed

webdev_2

Hi guys, to come clean, I've been a bit stupid / naive. I'm 20 and live with my parents at the moment.

I left part time employment at Sainburys Dec 2012 and joined a startup internet business, in Jan 2012 (on hired basis), which was excellent because it got me back into web development.

I have been working self employed since, simply drafting an invoice for my work monthly and trading under my own name.

My salary has been £1250 a month and I wasn't really aware, as silly as that sounds that I should update my circumstances with HMRC, now that I think it through (what was I thinking?!)

It has come to my attention that I need to sort this out, obviously I'll have national insurance to pay and some tax, which I'll gladly pay and sort this mess out, although I'm a little worried how this will all fold out, it has been 10 months since my first invoice was issued...

I have no UTR...nothing... has been mentioned at all.

I want to come clean and I do not want to be a tax cheat, I am seriously worrying about how much money in penalties I may have to pay? I understand there is a straight up £100, but there-on after I heard off an accountant there is a £10 a day fee? considering I'm 7 months behind mentioning anything... I'm over £3000 in penalties at this point? and I'm absolutely crapping myself, and I don't have this kind of money saved up at all!! my savings only reach up to about a third of this.

Any wise minds out there that know a little something about this, is this penalty charge really as high as what I've estimated?

What's the best way to get into the straight and narrow? I have no mentioned a thing to the tax-man yet until I know how to proceed with this in the best way, will I go to jail?

Many Thanks

HappyMJ

I wouldn't worry about it too much. The tax on the income earnt in the 2012/2013 tax year would be due in Jan 2014 anyway so you have plenty of time. If you have not filled in a tax return for the 2011/2012 tax year you still have until January 2013 to do that so still plenty of time. The £100 is a possible penalty for not registering on time. The £10 a day is usually for not filling in a tax return on time when requested. You haven't been requested so you won't get that penalty.

If you speak with them they are quite understanding and will probably waive any penalties imposed. (at least they did with me) They will only withdraw the penalties once, you must get your future tax returns in on time.

xylophone

http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=ytV91aFVn3U&formId=490

webdev_2

MJ, thanks for your help.

You've settled my mind, I guess I'll get on the phone to them tomorrow.

:eek:

Cook_County

Does not sound like you are self-employed at all.

It sounds as if you are an employee from what you describe.

webdev_2

The arrangement is a similar setup to been an employee, but I'm not on PAYE, so what ever you call it, it's a self employed arrangement as I'm been contracted.

Sorry if I didn't explain it through, I'm ringing the tax office this morning I'll report back, Cheers

dshart

I would also advise you to look into IR35 as your current arrangement may fall foul of those regulations.

Sambucus_Nigra

webdev wrote: »

The arrangement is a similar setup to been an employee, but I'm not on PAYE, so what ever you call it, it's a self employed arrangement as I'm been contracted.

Sorry if I didn't explain it through, I'm ringing the tax office this morning I'll report back, Cheers

You don't decide whether you are employed or not, the HMRC have very strict rules on this.

HappyMJ

Sambucus_Nigra wrote: »

You don't decide whether you are employed or not, the HMRC have very strict rules on this.

A contractor is always self employed. They are very similar. I have always been self employed issuing invoices for work completed according to what the client wants (a computer support technician) but really it's a lot like employment but without the job security, no sick pay and no holiday pay. Anyone can provide a contract for services (self employed) rather than a contract of service (employer/employee) and work as self employed rather than be a employee of an employer.

The HMRC decide on tax matters not on employment law. As long as the HMRC get the tax due on income and in the case of disguised employment as long as the client of the HMRC only deducts what a normal employee would then that is all they are concerned about.

Sambucus_Nigra

HappyMJ wrote: »

A contractor is always self employed. They are very similar. I have always been self employed issuing invoices for work completed according to what the client wants (a computer support technician) but really it's a lot like employment but without the job security, no sick pay and no holiday pay. Anyone can provide a contract for services (self employed) rather than a contract of service (employer/employee) and work as self employed rather than be a employee of an employer.

The HMRC decide on tax matters not on employment law. As long as the HMRC get the tax due on income and in the case of disguised employment as long as the client of the HMRC only deducts what a normal employee would then that is all they are concerned about.

No, a contractor is not always self employed.

http://www.hmrc.gov.uk/employment-status/index.htm#1

HappyMJ

Sambucus_Nigra wrote: »

No, a contractor is not always self employed.

http://www.hmrc.gov.uk/employment-status/index.htm#1

The link says the relationship and what the parties call it doesn't matter but it says an independent contractor is self employed.

In my work as a computer support engineer the answers to all the first lot of questions are YES and the answers to the second lot of questions are NO so really it point to being employed. I have been provided with a computer and a mobile phone by a client to be able to access the clients helpdesk system and to receive calls from the client's employees due to free calls between company phones. However, I sign a contract for services am self employed and pay class 2 and 4 NI contributions.

If the OP is providing a contract for services in providing web development services for the company concerned invoicing them monthly and taking on some risk and does not get sick or holiday pay then I would say that points to self employment and the OP should be paying class 2 and 4 NI contributions on the profit of his business.