Tax position for self employed - any tax accountants ou there?

[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.

You need to register as self-employed. Your earnings are low so you can apply for a low earnings exemption with regards to NI. This happened to DH for a short time and for simplicity he registered from the start of the new tax year. Technically wrong but there was only about six months of low earnings proior to this

thanks vicki

i am tempted to do that, but worried about being dishonest, although i would be avoiding a fine for late submission of a tax form only and not avoiding paying tax, which I wouldn't want to do, if I had it to pay.

If your income has been below the personal allowance threshold for the last two years, then there will be no penalty for a late return. There is an automatic penalty of £100, however the penalty is capped at the minimum tax unpaid at the 31 January...so in your case, £nil.

So there's no need to be dishonest, there won't be a fine to avoid.

Be aware that this change from October 2011, when the cap is removed and the penalty will automatically be £100 for a late return, plus interest on any unpaid tax.

Meant to add some links:

Info on the penalty cap is here

Info on registering for Self Assessment is here

lyra41, you are better to be honest about it. Despite much bad press HMRC can be very very helpful and really only want you to get things right. It is much easier for them to deal with you if you are honest and open and you will get the best advice. They also run free workshops for self employed people which are really really good. I would definitely recommend it

And no, i don't work for them

Thanks guys. That is so helpful & I am much more comfortable with being fully honest, so I will do as you advise,