to put this here as more people will look at it

[lyra41]

I have been running a small business for the past 2 years or so. As I don't make much money approximate £3,000 pa I have never filled in a tax return for the business. I thought, mistakenly perhaps, that as I am under my personal allowance threshold I didn't need to worry about a tax return. At a conference recently I discovered that colleagues in the same position as me do fill in tax returns, so I am unsure what to do next. If I confess to the tax office that I have been working all this time, will I be liable for fines? Or should I pretend that I am just starting out in business as from now. I would Peter not to lie if I can avoid it.
Thanks if you've got this far and any advice would be gratefully received.

The tax office are not mind readers. They dont know that your earning are below the taxable threshold.

Your accountant should be able to advise you on what you need to do.

I would phone the tax office and be honest about it. You don't want this to come back and bite you. They will find out.

are you doing anything about National Insurance?

Dont tell lies to the Inland Revenue - it's really not worth it. Give all the information to your accountant and let him deal with it for you.

Speaking from experience, the inland revenue like you to use an accountant rather than do the accounts yourself so yeah get a good accountant and you will be fine

Even if you do not make a profit you still have to pay National Insurance stamp which is paid monthly via direct debit.

YOu will be fined £100 per year for late submission, and may well get a further fine.

You need to fill in tax returns for each financial year since you have been trading.

YOu have to keep receipts for everything you have paid out too I hope you have them or you cannot claim for them.

I've been in a similar position, earnings-wise over the last few years, but have always filled in a self-assessment tax form anyway. It really isn't that hard and no doubt you'll (eventually) get a response confirming that you haven't earned enough to pay tax anyway. You don't have to register as a business necessarily and probably don't need an accountant.
Make sure you keep all your paperwork though (invoices, work-related receipts etc) so you can prove what you've been doing and what income you've had in case the Inland Revenue do want more info.

The Inland Revenue do not stipulate you need an accountant, you don't need one, a bookkeeper can do accounts to Trial Balance for a company with a turnover of less than £5 million, only companies who have a turnover above this threshold need their accounts audited.

Where are you I could do them for you either via email or face to face depending on your location.

I do them free to.

YOu have to register self-employed within three months of starting to trade. There is no leeway.

I wasn't going to bother with an accountant as my earnings are so low.

You don't need an accountant, go to the HMRC website and print off any of the tax returns for the years you need. Tax year ends April 4th/5th. Start filling in and fill in the Self-Employed section, you need receipts to prove your expenditure, if you want any help give me a shout. You need to ensure you have enough money avaialable to pay your National Insurance stamp backdated.

I have a book in which I have recorded income and outgoings, and I have kept receipts too. I'm just worried about not having done it when I started, which was November 2009. Maybe I'll be liable for 2 fines?

thanks fabby. Are you a book keeper then?

Yep I am. Okay so you started November 2009, your first tax return was due in on 31st January 2011. You are only two months late and should only have submitted one by now.

So you only have one tax return to do. You have a second tax return to do for the years 2010/2011 from April which you can submit in January 2012.

One return is all you need to do.

I would register now as self employed and say you started 3 months ago.Being honest is making a world of pain for you - start afresh - open a new bank account trade only using that and start all over again. They are not mind readers at the Inland Revenue - they will not investigate you unless there is reason to do so - if you are honest you are going to have lots of explaining to do.

Flabby
What do you think about limpingbint's suggestion?

No reason why not, so long as they don't call in your receipts, because they will have the dates on. Give them a call tell them you became self-employed in November 2010 and what do you need to do.

Your first tax return won't be due then until after April this year.

Remember that if you get benefits they are taxable so would need to be included on your return.

But I guess I would only supply receipts post Nov 2010 anyway wouldn't I?

If you became self employed in November 2011 you would be claiming for expenses from that date not before it, they only call in 1 return in 10,000.

also, i don't think I had many expenses since last November, just petrol really. and probably £90 pw max income in that period.

What was your status before you went self employed was you employed? And did you get a final P45? If so you should have sent that off to get a tax rebate.

You dont have to have an accountant.

You dont have to have an accountant at all BUT they like it for some reason if you do.

MY DH is self employed and he used to do all his own paperwork. One time he ticked the wrong box, it didnt get noticed and so the next year he ticked that same wrong box. This time they noticed and did random checks on him. Now he has nothing to hide but they did a full investigation on him (and me) and the stress made him ill. All's well that ends well thank god but he now does use an accountant just to avoid issues like that.

But no, you dont have to have one and if your books are fairly simple am sure it will be fine...but just be honest with them

A bookkeeper is cheaper and is just as capable. They have no preference for whether you have an accountant or not.

Bookkeepers work in firms of accountants and actually do the books an accountant only audits limited company accounts.

By accountant I mean book keeper too...I think they reckon its more official??? My accountant told me they dont likes these "back of the fag paper" traders..........maybe she's old fashioned though (or fishing for business)