Confused by HMRC site, and which step to take first

Savvy_Sue

I'm trying to point DS1 in the right direction: he was registered as self-employed with HMRC, then got a job and told them he wasn't s/e any more, and now no longer has a job and is once more s/e.

(It's a moot point whether his s/e ever ended, but we'll leave that to one side for now as he has continued to do a tax return ...)

I have a two part question, although it may be a bit roundabout:

1. for HMRC, I started on this page, but as I go through it, I find it says

For Self Assessment you also cannot use this service to register if:

• HMRC have already given you a Unique Taxpayer Reference, please follow the link Becoming self-employed to notify HMRC

Now, clearly he must have a UTR if he's doing self-assessment online, so is that where he starts, on the Becoming self-employed page?

2. I think he'd find it worthwhile to pay an accountant as his affairs aren't entirely straightforward. He finished the day job towards the end of the 2012-13 tax year, and since then his actual income has been minimal - he's been living off his savings while making indie computer games, and while this will never enable him to keep me in the manner to which I'd like to become accustomed, it makes him happy and his needs are simple.

He co-wrote his latest game with a friend, and the sales are going into his friend's company and he'll get payment eventually from that. The friend lives in Australia, and the company is based ... DS1 isn't sure where but doesn't think it's either Australia or the UK! Which makes me think it might be worth him setting up a Ltd Co.

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Separate from the above, he says he has a letter from HMRC saying he owes tax from before he started the job, and he's not sure why. Between us we might be able to work this out, but the letter arrived just before he went away for six weeks, so all he did was check that it could wait until he got back.

So, would he do best to find an accountant BEFORE re-registering, or is there nothing to lose either way?

And yes, I know he should sort this out himself, but once we're over the initial inertia, he'll be fine ... it's the initial inertia that's the problem!!!

chrismac1

If he already has a live SA number and received a "Notice to file 2012-13 tax return" then he should simply do that, no need to attempt to re-register. It will be much better to find an accountant right now - if your next move turns out to be a mistake, that's just one thing the accountant will have to unravel and hence the fee will be higher.

Given an SA number and post code, the accountant can check within 5 minutes whether the SA number is definitely still live in the system. Within a month - once the authorisation is through - he or she can then also check the exact status of each tax return for the past 4 tax years, and start filling in any gaps and correcting any previous errors made.

Laurajo_2

I agree - go to an accountant first.

If he ha previously been in self assessment he doesn't need to re-register, BUT if he stopped paying class 2 national insurance (the old 'stamp') he will have to reregister to start paying these....if his profit is below a certain level (think it's about 7.5k this year) he will be able to apply for a small earnings exception, which means he won't have to pay them, but he still needs to register. It's form cwf1 for registering for class 2 NI contributions..I don't know if he can do it online.

But an accountant would be able to sort all that for him.

Savvy_Sue

Thanks both.

I think he was paying s/e NI, but certainly isn't now. Personally I'd advise him to re-register for that even though I doubt he expects to go over the limit, because he's going to want a pension one day! And there's no sign of him being in a position to get HRP any time soon ...

I fired off an email to an accountant local to me last night, he could probably do this remotely or they may know of someone near him. He'll be really bad at the 'contact three of different sizes and see which seems to make sense for you' bit of the advice usually given for finding an accountant!

But for now I'll send him home and tell him to find ALL his paperwork - P45s and P60s for the last four years - AND collate all his income details, AND trawl his emails for potential business-claimable purchases, that'll keep him out of mischief for now.

Savvy_Sue

Oh, and he also needs to look at his P45 and payslips from his last job, his Student Loan statement says nothing was paid last year, and I can't believe he wasn't over the limit at any point in the tax year ...

kazwookie

You might find it easier to ring HMRC and have a chat to them, they have always been very helpful when I have rung them.

Getting all the paperwork togwther is a good start.

Savvy_Sue

kazwookie wrote: »

You might find it easier to ring HMRC and have a chat to them, they have always been very helpful when I have rung them.

Getting all the paperwork togwther is a good start.

He was explaining that phoning is difficult because he only has a PAYG phone, which he mostly uses to text, no free minutes. No landline at home. I said he should phone first thing when he wouldn't have to hold for long, and that I thought calls were no longer as expensive as they had been.

The concept of 'first thing' is slightly alien to him. I'm prepared to ask questions 'in principle' on his behalf, but not before he's given me The Facts.

jimmo

Sue, I feel your pain. Been there, got the tee-shirt.

First of all, I could only really help my son when he wanted my help. Before that he was just paying lip service to our father / son relationship and I fear that is where you now are. If your son “can’t afford” to call HMRC, its an 0300 number now, what makes you think he will be able to afford to pay an accountant?

I get the feeling that your son doesn’t see any urgency in sorting out his tax situation and, given the public impression of HMRC expressed on this board, he may well be right.

You haven’t provided any information about his previous self employment but in the venture you have talked about he co-wrote a game with a friend. Did he do that as a partnership with his friend, a partnership with his friend’s limited company , as an employee of his friend or an employee of his friend’s limited company?

Does it really matter? The red tape requires your son to answer those questions but the bottom line is that if no tax or NI is due, you and your son could waste a hell of a lot of time and money on this.

As a general rule I would suggest that the tax on an employment with no benefits is just sums not requiring an accountant, but, like many others seeking help here, you have not given sufficient detail about your son‘s self-employment, if that is what it is, to enable us to make a value judgement on how your son should handle this.

Savvy_Sue

jimmo wrote: »

First of all, I could only really help my son when he wanted my help. Before that he was just paying lip service to our father / son relationship and I fear that is where you now are. If your son “can’t afford” to call HMRC, its an 0300 number now, what makes you think he will be able to afford to pay an accountant?

It's complicated, as ever ... and I am conscious that he will (or ought to) read this thread. Suffice it to say that I was suggesting that he ought not to leave regularising his affairs too long, and jokingly offered to let him pay me to sort them out for him, and he said he was happy to do this, happy to pass on to me whatever bits of paper I demanded etc.

Then he explained a bit more, and I chickened out! :rotfl:

And there are two different kinds of 'can't afford': of course he can afford to top his phone up, frankly it's ridiculous that he still only has PAYG, BUT being a good moneysaver he's found that most of the time he can top up by £10, get a load of free texts for the next two months, and live off texting.

jimmo wrote: »

I get the feeling that your son doesn’t see any urgency in sorting out his tax situation and, given the public impression of HMRC expressed on this board, he may well be right.

My son rarely sees any urgency in anything until he's right up against the deadline. But AFAIK he's filed his self-assessments on time since he first left Uni, and paid any tax due on time.

He's been 'really busy' since giving up work in February though, you have to understand that a six week trip to the USA and Canada, followed by an intensive effort on this new game, followed by ANOTHER trip to the USA and Canada promoting the game, well, it all takes time, doesn't it? And it's a tough job, but someone's got to do it ...

jimmo wrote: »

You haven’t provided any information about his previous self employment

he graduated in 2009, and had an initial period of self-employment then, I have no idea what he was doing or whether he made any money (and he was living at home then!), he did also work part-time at the local cinema.

That lasted about a year, then he got a proper job summer 2010, 5 days a week! He reduced his hours there to 4 then 3 days over the next couple of years, and gave up completely in Feb this year.

he made some money in that period, because one of the games he wrote on his own got noticed on the indie circuit.

(when I say 'he made some money', what I really mean is that 'he had some payments coming in', once you take any expenses out there probably wasn't much profit.)

jimmo wrote: »

but in the venture you have talked about he co-wrote a game with a friend. Did he do that as a partnership with his friend, a partnership with his friend’s limited company , as an employee of his friend or an employee of his friend’s limited company?

:rotfl: Two lads put their heads together in a Chinese restaurant and a game was born. I believe there IS some paperwork outlining how the money's to be split and paid, but it may not yet be signed.

jimmo wrote: »

Does it really matter? The red tape requires your son to answer those questions but the bottom line is that if no tax or NI is due, you and your son could waste a hell of a lot of time and money on this.

As a general rule I would suggest that the tax on an employment with no benefits is just sums not requiring an accountant, but, like many others seeking help here, you have not given sufficient detail about your son‘s self-employment, if that is what it is, to enable us to make a value judgement on how your son should handle this.

thank you. I'm sure that answer will make him very happy, BUT before he takes it and runs with it he needs to satisfy himself that there is no tax due. For this tax year that may well be true. For last tax year there's definitely some income over and above his employment. And I don't know what expenses he could claim - there is a promotional t-shirt! - assuming he could produce the evidence. As well as that there was a week spent in London when that solo game was featured at an Indie games exhibition, for example, before we get onto the USA exhibitions where the joint game had more exposure ...

Obviously there was a holiday element as well though!

He was home for part of the weekend, which is the only reason we got talking about this: he's gone back home with instructions to sort out his paperwork, and talk to his fellow game writers and see if any of them have any helpful contacts.

Savvy_Sue

I've been thinking a bit more about this (as you do ...)

There may or (more likely) may not be a tax liability for the year 2013-14. He can worry about that later, and the mechanics by which his earnings from this joint game become due to him.

However, for 2012-13 there is definitely undeclared income from his solo game, and possibly for 2011-12 as well because I don't know when he de-registered and stopped paying s/e NI.

although equally there may be a refund due because he didn't work a full year.

But the next step is obviously for him to get the information together, because no-one can help - not even his all-powerful and all-loving mother - until he's got some numbers. And then he can see if they are big numbers or little numbers.