Tax Problem

[saintjohnny]

I have just received a form P92 from HRMC wanting to know what my employment status was between Oct 03 and Feb 05. This is the period that I thought I was self employed, working as a consultant for a recruitment firm. I had never been self employed before, and fioolishly, I did not hire an accountant, thinking that it all seemed very straightforward, and that I could take care of it myself. I remember filling in the relevant forms to register as self employed and sending them to what was then the Inland Revenue. However, I never heard back from them and I never received a tax bill. I just thought that they would eventually bill me and I forgot about it. Since Feb 05 I have been on PAYE. Obviously I do not want to dodge my tax responsibilities, but if they make a demand for thousands of pounds now, I won't be able to pay it. What is the best course of action now that is both legal, and will reduce any outstanding payments to a reasonable level?

[buildersmate]

Being self-employed obliges you to complete the self-assessment tax forms. They should have sent them to you but just because they didn't, does not let you off the hook. You would only get a tax bill (assessment) following completion of this form - IR would have no other way of asessing your income. You also will owe the relevant NI contributions for the period of self-employment.
You will either have to complete the details of the income and expenses for the periods in question or employ someone to do it for you.
There is no way of reducing the payments due to a 'reasonable level' - other than maximising the allowable expenses. Employing a professional might help to do this.

[jedimistress]

Do you have proof you registered? If the Inland Revenue failed to issue you with Tax Returns then you will have to fill them in now, but should not incur penalties.

The worst that can happen is that you will have to pay the tax due plus interest and penalties. They may be flexible and allow you to pay over time if you owe anything. Youwill have to fill in a statement of income form and they may allow you to pay in installments.

How much do you think you earnt (per week if necesary) during that time and I can guess your tax liabilty for you.

[saintjohnny]

Thanks, much appreciated. I earned about �390 per week. If you could work that out for me, I would be eternally grateful! Also, am I going to get into serious trouble for this?

[jedimistress]

Sorry for delay in reply, at that rate, your tax due would be �2183 for a full per fiscal (tax) year.

[saintjohnny]

Hi, thanks so much for your help, but that sounds really quite low!