Self employed Undeclared earnings

[Ckatieeee]

Hey.

For the past 17 years I have been a self employed hairdresser earning on average £150 per week. I've never been very computer friendly and I honestly thought that if you earn less than £11,500 you don't have to declare.

I am separating from my husband of 30 years, he's very controlling financially. Which is now being classed as domestic abuse by my solicitor. I'm scared that he will bring up my undeclared earnings and try to get me in trouble.

I don't know what steps to take next, I have two children 17 and 22. And my husband has disowned them both, and because of how irrational he's acting i don't know what he'll do next.

All i use to keep track of my hairdressing is a diary where I've wrote my appointments.

My daughters are happy to help me make up a spread sheet, I've got no idea what to send into the tax man.

do you know how much you have earned each year? You'll have to register as self-employed with HMRC, you'll have a £100 fine for doing it late. Then you'll have 11 retrospective tax returns to do, with fines for each of them for being late.

You need to talk to your solicitor about whether the abuse can be used in mitigation.

Not the exact amount. Around £7000, which is used on the food shopping.

Well there's no way i'll be able to pay that. Like i said, my husband is financially controlling and i only have £65 to my name.

Contact HMRC.
Tell them you've made a huge mistake, because of a misunderstanding.

You will need to 1. Register as self employed: Google this first, to make sure you qualify.

1. Register for self assessment- filling in tax returns- you'll get prompted when to do this, and lots of help is available.
2. Give them whatever info they ask you for about the missing years.
3. Sort out your National Insurance situation- needs doing, but not the most urgent thing.

Don't be put off because it sounds like a lot.

I cannot overphasise- tell HMRC now , don't let them find out. Tell them yourself. Do it now

Why? There is an official policy of being relatively understanding of people who own up voluntarily to not having done things right.
There is a policy of assuming the worst of people who get dobbed in, or found by HMRC.And that path is an intrusive and ,rightly, difficult process to go through.

It will be stressful, and go on for a bit. But you have got this wrong, and you need to hold your hands up to that.

Did I mention, tell HMRC now

If you voluntarily confess to HMRC, it's discretionary as to what penalties are applied.

Plead your circumstances, certainly.Tell them everything that's affected you.

Don't get adversarial with HMRC, or get a solicitor onto them. Be contrite, and accept the reality that , mostly, their word is law.

And, in the unlikely event they get heavy with you, come back here for advice.

Sorry to go on.
Reading that back, I don't think I've been reassuring enough.

So, ime, if you do the right thing now, and are suitably contrite and give honest figures, I think you'll be pleasantly surprised at how little a slap on the wrist you'll get.

I've never properly kept track of the money, and i throw away the previous years money.

God I've really screwed up.

Most of what i tell them will be guess work.

*previous years diaries.

Don't worry about that now.
Far easier for them to see that you're small fry who unintentionally got it wrong, if what you have are incomplete records, and not a spreadsheet.So forget that for now.

It's very unlikely that you'll be asked to do 11 years of tax returns.
You need to tell them NOW, that ,because you misunderstood, you haven't been doing the tax returns. They'll ask you for the info they need. You don't have to have any figures worked out before you tell them.

Write a letter, get it in the post TODAY ,saying that you're horrified to find you've been doing it wrong,and you want to straighten things out. Just include the info you've given here, nothing more.

Send it to
HMRC- Self Assessment
PO Box 4000
Cardiff
CF14 8HR

Keep a copy! Do this every time you communicate with them.
First class, get proof of posting.

And, obviously, you don't mention that your reason for coming clean is a fear that your ex will dob you in.

You've found out that you've been doing it wrong, and you want to put things right.

I will, Thank you for being so helpful.

It just seems like a mammoth task and i had no idea where to start.

And remember that even if you’re “earning” £11k, that’s your turnover,
Not profit, so you can deduct your costs, inc mileage if you drive, from this to equal your profit / earnings.

I've spoke to HMRC and they couldn't care less as i'm earning under £11k a year.

All i have to do is register as self employed and then next year they'll send me a return to complete so they can tell me i dont have to pay tax.

Thank you for all the help!

I have a friend going through a rather similar situation - I'd told her what @DancingLedge and others on here told you, and it's great to hear that in your situation HMRC are being the sensible helpful people I have told her they are if you go in civil, confused and asking advice.

Did you tell them how long this has been going on for on the phone? If you want to come clean, I would put everything in writing so there is a record.

The personal allowance has increased a lot recently so for the majority of the 17 years, you should have been paying tax. It is very difficult to believe that you spend 17 years self employed without realising you are supposed to pay tax. If you are deemed to have not declared it deliberately, they can make you pay the tax back for each of those 17 years, plus interest, plus penalties.

Penalties are greatly reduced if you tell before they find out and also if you are cooperative you are eg if you do your spreadsheet and make your diary available to them if they wish to see it. On the other hand, if you do it right going forward, maybe nobody will pick the issue up.

Result! Ckatieeee.

I imagine that's a weight off.

Next step: National Insurance Contributions. No one's going to pursue you for not having paid these, BUT, it could affect your pension.
First step :. www.gov.uk/check-national-insurance-record go through this, and get them to send you a record of your contributions, and a forecast of what pension you might get.

You will get some years ' credited' when DC were small, regardless of your low earnings.
(To be accurate, it's a reduction in the years needed to qualify for a pension).

If you're some years short of the number of contribution years you need to get a pension, it's possible to buy at least some of these years now.
Given that you were in a financially controlling marriage, I'd be taking this figure to your solicitors, and pointing out you need this sum as part of the divorce.

But , first things first, get that forecast and contribution record, and give us a shout if you need any input with that.