Delayed self-employed tax return help

Manurads

Merry Christmas everyone!
I have been very negligent about my tax return. I was registered as self-employed 7 years ago then moved abroad. I moved back 2 years ago and this is the situation: I earn 70K as PAYE. For the last 15 months I have also made about 35K as self employed (from Sept 2011).
In the last 15 months my life has been a roller coaster (lost part of the family, bought my first house, had my first son and expecting the second one, changed house twice,...). Due to pure negligence I have not declared any of the self-employed income and is only now, during the first real break in months that I realize I may be in deep S#%t. I was hoping for a peaceful Christmas break and instead I am turning in bed with my eyes wide opened. I have not attempted to avoid tax. I know is a criminal offense. It is pure negligence (probably not an excuse for HMRC...). I plan to get this sorted with an account after Christmas. In the meantime I could do with some advice:
-I registered 7 years ago as self employed. Was I supposed to reregister 3 months after re starting the SE activity?
-What is the fine I should expect? Part of the taxes I should have paid belong to the 2011 tax year, and they are well overdue.
-What do I risk if HMRC realizes this before I organize all the paper work with an accountant? ( I think it is extremely unlikely they will, as I do not advertise myself or anything)
-I am in a high Tax band. Do I have a self employed tax allowance or all the income will be taxed at 40%?
-Out of curiosity, what are the chances of HMRC finding out? How do the monitor or search people that unlike me ma try to commit fraud in a similar way?

Thanks for your time and advice

chrismac1

Hopefully your worst fears will not be realised. taking things setp by step:

1. You started trading in September 2011. Strictly you should have told HMRC about this by Dec 2011, however delaying in doing this is usually not penalised especially where the taxpayer is the party who first raises the issue rather than waiting for HMRC to find out.

2. Your first set of accounts should run from Sept 11 to either 31 march 12 or 5 April 12 - the tax year ends on 5 April, but HMRC accept 31 march accounts as if they were 5 april and many folk keep records monthly.

3. So that is part of your 2011-2012 tax submission, along with your PAYE stuff, any savings income and anything else which might be relevant such as overseas income, pensions income or payments, and so on.

4. The due date for this is 31 January 2013, which is also the date any tax due - plus a payment on account of 12-13 - must be paid. So you can still file on time, and the really big fines only start clocking up for late filers.

5. One thing to realise is that the behaviour of the taxpayer makes a big difference to potential fines and penalties, and there is very little discretion on the part of HMRC for this. If you tell them now and submit your return on fine, the worst you can expect is a small fine - £100 max. in my view - for not having registered on time. If you don't, and leave it for HMRC to discover, you not only have the tax to pay but a likely fine on top in the range 70% to 100% of whatever tax is due.

The income will be taxed at 40%, and so your PROFITS - sales less expenses will attract 40% tax. Based on your post, if £35k is your profit for a 15 month period then £15k or so fell into the 2011-12 tax year. Your total income was below the £100,000 level at which personal allowances start dwindling to zero and the marginal rate of tax leaps from 40% to 60%.

So the action plan is:

1. Register for self-assessment.
2. Get accounts prepared to either 5 April 2012 or 31 March 2012.
3. File before 31 January 2013.

In passing, a decent accountant should be able to save you quite a bit of tax.

PlutoinCapricorn

You say that you have been self employed in the past: did you officially re-register by giving HMRC the date that you ceased trading? Did you stop paying Class 2 NI when you moved abroad?