Advice Needed. Self employed and not paid tax for 3 years

ryan871

(sorry if wrong section)
Hi,
i've been working as an affiliate since 2013 and only just recently found out this is classed as self employed and taxable. How stupid am i

Anyway, im wanting to come clean - sooner rather than later as i would rather them find out from me rather than themselves. Im quite scared about what is going to happen and what fines i could be facing,

Affiliate Earnings similar to amazon but it is CPA, example advertising offers and recieving commision per sale.

Rough Estimate of Earnings:
2013: £21,000
2014: £4,600
2015: £3,000

I would like to know:
* best way to approach this: would they need to see bank statements etc...? all my personal earnings and business earnings are combined in 1 account.

* I have a primary full time job which i pay tax on over 10k per year so im guessing all my affilate earnings are taxable.

What sort of tax im i looking at having to pay back? and what fines/penalties?
If i go to them first, surely wont be a too big fine i.e double . Its not like ive purposely avoided paying, i honestly didn't know i was required to.

Thanks for any advice

Takingmytime

Don't panic you won't get any fines. I can't post the link to it, but if you go to the HMRC website, look up 'undeclared income'. It clearly states you are able to declare any income from up to 4 years previously.
This means you've realised in time to avoid all penalties. Check out their info and if you're unsure of anything, I'd suggest seeing an accountant to work out your expenses and net income. Particularly for 2013.

January2015

You can offsest business expenses against this income. For example you can claim for use of home as an office, etc. I don't know all the in's and out's but seek advice, because it will reduce your tax liability.

MallyGirl

January2015 wrote: »

You can offsest business expenses against this income. For example you can claim for use of home as an office, etc. I don't know all the in's and out's but seek advice, because it will reduce your tax liability.

you can do this but it can affect Capital Gains Tax when you sell - be careful with this one.

Thistlewhistle

My friend works very high up in HMRC and I asked her about this.
She said that you get massive brownie points for taking the initiative and being seen to be trying to do the right thing and sort everything out.
At the end of the day, a while back, HMRC gave us all the responsibility of doing everything ourselves, so they understand that for the majority of people, it's a minefield of confusion. If you're worried, you can always call them up - they'll do all they can to help. If they can see that you're not avoiding things, you're just a bit confused and trying to sort it out, they'll be ok.

Tx

National_Debtline

Hi

You might find it useful to speak to Business Debtline about this.

www.businessdebtline.org

James
@natdebtline

ryan871

thanks for the useful info guys, im gonna learn as much as i can before i take action on this.

Can anyone answer these questions?

* What sort of tax im i looking to owe them from the 3 years values i posted?

* On the GOV UK page about undeclared income it says:

You can register for Self Assessment to declare any income you haven’t paid tax on from the last 4 years.
If you tell HMRC as soon as you can, they may consider your case more favourably.

This mean i can still be fined?

* All my personal income and business income is mixed, will this be a problem? and will they want to look through my bank account?

ryan871

looking for more input please

CalumHeath

ryan871 wrote: »

This mean i can still be fined?

Yes, if you don't declare your earnings you can still be fined.

ryan871 wrote: »

* All my personal income and business income is mixed, will this be a problem? and will they want to look through my bank account?

You do need to make an effort to separate your business and personal money matters.

*~Zephyr~*

It's impossible to say exactly how much tax you owe without more info. You have to deduct your personal allowance for each year and that varies each tax year. You give dates, but do those dates equate to tax years? I.e. when you say '2013' do you mean tax year ending April 5th 2013?

Assuming that is what you mean, personal allowances (PA) were:

2013: 8105
2013: 9440
2014: 10000

SO with earnings of:
2013: £21,000
2014: £4,600
2015: £3,000

Your taxable income would be:

2013: 12,895
2014: 0
2015: 0

This is assuming that you have no other income from elsewhere (i.e. paye jobs).

That being the case, you're looking at a tax bill of 20% x 12,895 = £2579.

But, if you have any allowable expenses to be applied, this will reduce your tax bill.

Hope this helps somewhat.

greensalad

You need to work towards getting your business earnings away from your personal accounts for the future. I would suggest getting a second bank account, only paying your earnings into that account, then transferring yourself 75% of the income as your pay (leaving 25% in your "business" account to cover your tax bill and any other expenses). But don't confuse yourself by getting a "business" bank account - you can still use a personal current account because you are a sole trader.

I would strongly suggest you hire an accountant at this point because you need help working out tax owed and what you can deduct.

Now is also the time to think about any business expenses you have incurred. You're unlikely to have kept receipts but if you've ordered online then invoices in your email can be used. Have you bought anything specifically for the business? Stationary, computer equipment, have you travelled anywhere solely as part of your business requirements? If so (and if you have the receipts) you can claim these as expenses, which reduce your profit and in turn will reduce your liable tax.