HMIR mess...help please!!

Nikiya

I am a UK resident but not a British citizen. I have never found a proper job here and last October started doing some free-lance work in interpreting and translation. I know I should have registered as self employed before or shortly after, but I was not sure this was going to continue and was scared of the bureaucracy involved.
Now a company I did two jobs for (and for whom I won't work anymore) has discounted from me more than 25% of my earnings in taxes and sent me a P60. Considering that my total earnings so far from 1/10/06 to the end of April 07 are barely above £3000 that is ludicrously unfair. On the other hand, I know I am up for a £100 fine for not having declared myself earlier.
I do not make enough money to justify paying an accountant. I have been to the IR site and found it way too complicated, and more geared towards the small business than towards someone who just gets the occasional (lowly paid) assignment... the trouble is that if you work for an agency they pay you with a check and not cash as is the case with cleaners or gardeners.
Friends have advised me to phone the IR for a form or go to one of their offices, probably wasting a whole morning. What do I do??
Also, what happens when I leave the UK for good. Will they contact my country of origin to report the meager amount I have paid “towards a pension”?
I have even considered not working any more, but I do need the money and enjoy my job. I am really good at it. Isn’t this unfair??
Thanks in advance for any advice!!

CLAPTON

i dont really see whats so dreadfully unfair.
if you simply followed correct procedures then you wouldn't have to pay any tax anyway (based on your figures).
HMRC will help you sort out the issue.

Pagan98

The company that has deducted tax and issued you with a P60 has treated you as an employee, not as self-employed. If your earnings are as low as you state, you should be able to claim the tax back. (Most people had a tax free allowance of £5,035 for 2006-7). So if your earnings in 2006-7 were just £3,000 you could claim all the tax back.

You are required to register as self-employed within 3 months of starting a business. As you state, the fine for failing to do so is up to £100 (but may be waived by HMRC in some circumstances). You will also have to pay £2.10 per week in Class 2 NI contributions (£109.20 for the year). Class 4 NI contributions are only due on earnings above £5,035 per annum so are probably not relevant to your circumstances.

Ignoring allowable expenses, even if you earnt £6,000 in the year, i.e. double your 6-month figure from October to March, you should only be looking at about £100 tax (£965 * 10%), £110 Class 2 NI, £80 Class 4 NI and £100 fine, so on your figures you could claim back about £370 (£3,000 * 25% - £100 tax - £180 NI - £100 fine).

Don't be put off by the self-assessment form. If your affairs are simple it is actually very easy to complete. If your only earnings are UK income you can complete online and have the calculation performed automatically for you. I'm sure plenty of people on here will help with any queries.

I am not an accountant but the above is my understanding of the situation. I hope it helps!

Nikiya

Thanks Pagan! I have always been scared of bureaucracy. I was worried to get hooked on in the system, having to submit forms all the time and with no earnings to make it worthwhile! There were also personal reasons why I could not take care of that before.
The company that gave me the P60 did so because I did not have my own "self employed" Nº. What is the form I have to fill in to become self-employed? The ones I found in the IR site seemed to be for small businesses. Should I call the IR and ask them?
Also I do not understand N2 and N4 and why would I have to claim more than I have already paid? Thanks again!

Murdina

It may help if you accept that you are a "small business". The form from memory is a CWF1 which registers you for NI. If the people you worked for gave you a P60 then that income has to be returned as employment income on a separate page on any self assessment tax return. Please do bear in mind getting income as employed/self employed is not a question of choice. It can be a very grey area but you do need to be sure you do not allow "employers" to pay you gross when you may actually be an employee.

Murdina

and the national insurance you just accept as a given. If your earnings are very low you can claim small earnings exemption from class 2 NI. Class 4 only kicks in at £5035 as stated above. If you are really nervous about all this it may save time and trouble in the long run if you were to pay a tax adviser or accountant.

Nikiya

Thanks! I would just like to know which telephone to call, since there are so many for self employed at the site I do not know which one to use...

georgan

Hi,

a simple letter to the tax officer that is recorded on your P60, indicating that this was your only income last year and attaching the original P60 to your letter would suffice in assessing your specific case of your previous employer and return any Pay-As-You-Earn tax amount withheld by them. This worked out for me in a similar situation of my employer PAYE-filtering my first year's income which in total fell below the annual tax allowance. It may take 1-2 months to get a reply, as they are very busy, but eventually they will reply with a fat cheque enclosed.

The above recommendatin is my personal experience, which worked without having to fill-in a tax return or any other form.

Aris

Tarasam

Nikiya wrote: »

Thanks! I would just like to know which telephone to call, since there are so many for self employed at the site I do not know which one to use...

Phone your local tax office and they will direct you further....

You are delaying this so it will take a lot longer to sort.

We cant do this for you, its your mess not HMRC's

Nikiya

Thanks Aris! I might start with a call to one of the numbers and if they tell me the P60 is a different thing I'll contact them by writing.

Nikiya

Hi! I just wanted to report that “local” tax offices do not exist any more. An accountant friend has confirmed this.

I want to make this clear to Kellyshay: I never expected you or anybody else to “do” things for me.
I believe this is a space where people try to help each other and share experiences and information in good faith. In this spirit, I want to thank again all of you who have chosen to do so.