Herald Series Tax Column 410

Q. I started a business as a self-emloyed window cleaner last Summer. In April I told HMRC about my earnings and they said they would send me a tax return. I completed the tax return, but now I have received a £100 penalty. They have told me that I do not need to pay any tax until next January, so how can I get a penalty?

A. The penalty is in respect of late registration of your new business rather than any failure to pay tax.

Anyone commencing in business must inform HM Revenue and Customs within three months, otherwise there is an automatic £100 penalty. Such penalties are a little harsh. You started a new business and then sought to deal with your tax return once the tax year had come around. This would seem to be a reasonable approach, but you were unaware of the three month requirement. As you are a small businessman without an accountant, HM Revenue and Customs may consider cancelling the penalty, but there is no guarantee of a sympathetic hearing.

As you failed to register the new business in good time, you may find that you have to get your National Insurance position up to date. It would be better to ask for help from HM Revenue and Customs sooner rather than later on this point.

Date of Publication::

Source of Publication:

1 October 2009

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