Self Assesment for beginners
Self Assesment for beginners
Author
Discussion

Elroy Blue

Original Poster:

8,842 posts

222 months

Tuesday 8th January 2013
quotequote all
My other half started her own business last year and while it'll never make her rich, it's ticking along. I've been nominated as the company accountant. I've looked through the self assessment site and it all looks straight forward enough. I'm just about to complete and send the information through, but should I have put info in the wrong box or made an obvious mistake what are the consequences. A polite 'put this right' from HMIC or a nasty threatening letter.

(It's a very small business and she is likely to fall below the tax threshold after expenses etc)

Burrow01

1,986 posts

222 months

Tuesday 8th January 2013
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Hi

Its actually easier to ring HMRC and discuss the amounts of profit you are talking about.

If its below £2500 they will just adjust your wifes tax code to take it into account

Eric Mc

125,767 posts

295 months

Tuesday 8th January 2013
quotequote all
HMRC have no legal power to "accept" telephoned details that they have already requested to be processed through Self Assessment. If you try this and ignore the Self Assessment, you could be looking at a penalty of £1,300 by this time next year.

Are you claiming all the costs and allowances that a business is entitled to claim?

Are you claiming Capital Allowances for equipment and assets used in the business?

The option to have tax collected through a PAYE coding is only open to those who have another source of income that is taxed under the PAYE system (such as an employment or a pension).

Most sole traders do not have that option. It is an option with mixed blessings anyway. Most of my clients who have that option prefer to pay whatever taxes they owe directly (and claim refunds directly too) rather than have their PAYE codes messed about with.

Edited by Eric Mc on Tuesday 8th January 14:47

Burrow01

1,986 posts

222 months

Tuesday 8th January 2013
quotequote all
Hi Eric

Just offering it as an option, as some people are not aware that its possible

Whether its attractive or not depends on the specific circumstances

essayer

10,410 posts

224 months

Tuesday 8th January 2013
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Doesn't Self Assessment need to be submitted by 31st Dec to deduct via your tax code, in any case?

Eric Mc

125,767 posts

295 months

Tuesday 8th January 2013
quotequote all
essayer said:
Doesn't Self Assessment need to be submitted by 31st Dec to deduct via your tax code, in any case?
If after 31 December, it will appear in the FOLLOWING year's tax code

i.e. an under/over-payment for tax year 11/12 will amend your 13/14 Coding rather than the curent 12/13 Coding.

It can all get a bit complex and messy.

Allanv

3,540 posts

216 months

Tuesday 8th January 2013
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Eric Mc said:
HMRC have no legal power to "accept" telephoned details that they have already requested to be processed through Self Assessment. If you try this and ignore the Self Assessment, you could be looking at a penalty of £1,300 by this time next year.

Are you claiming all the costs and allowances that a business is entitled to claim?

Are you claiming Capital Allowances for equipment and assets used in the business?

The option to have tax collected through a PAYE coding is only open to those who have another source of income that is taxed under the PAYE system (such as an employment or a pension).

Most sole traders do not have that option. It is an option with mixed blessings anyway. Most of my clients who have that option prefer to pay whatever taxes they owe directly (and claim refunds directly too) rather than have their PAYE codes messed about with.

Edited by Eric Mc on Tuesday 8th January 14:47
Eric,

I have been PAYE since 2010 and they have sent me a online submit reminder again this year, do I need to do it or ring them to stop them requesting it?

Sorry for the thread hijack OP.

Eric Mc

125,767 posts

295 months

Tuesday 8th January 2013
quotequote all
Do it.

Being PAYE does not automatically mean you shouldn't be completing an SA return.

Are you a higher rate taxpayer?

Do you have income outside of your salary - such as bank interest received, dividend income or rental income?

Do you pay into a personal pension?

Do you make charitable donations under Gift Aid or Deeds of Covenant?

sumo69

2,164 posts

250 months

Wednesday 9th January 2013
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Eric Mc said:
If after 31 December, it will appear in the FOLLOWING year's tax code

i.e. an under/over-payment for tax year 11/12 will amend your 13/14 Coding rather than the curent 12/13 Coding.

It can all get a bit complex and messy.
Eric

That is completely WRONG.

The 2011/12 returm must have been filed by 31/12/12 to have an underpayment coded out (if less than £3k) to the 2013/14 tax year - if submitted later then the liability will need to be paid in full by 31/1/13 to avoid interest accruing and certainly by 28/2/13 to avoid a 5% surcharge being levied.

David

Eric Mc

125,767 posts

295 months

Wednesday 9th January 2013
quotequote all
Thanks.

I never opt for tax coding adjustments for self assessment anyway so none of this ever affects my clients. Which is probably one of the reasons why I may be a bit wolly in this area - as I never exercise this option. Paying the amount up front is the simplest option, in my opinion.

having said that, I genuinely have seen some instances where the adjustment to a person's PAYE coding relates to a tax liability or refund that was from a previous tax year prior to the last tax year. Maybe HMRC don't always follow their own rules.

For those interested, Money Box Live are carrying out one of their Self Assessment phone-ins at 3.00 pm today on radio 4.



Edited by Eric Mc on Wednesday 9th January 08:51

sumo69

2,164 posts

250 months

Wednesday 9th January 2013
quotequote all
Coding out also has an advantage as it may avoid clients having to deal with payments on account as well - always asking your client if they prefer the cash flow advantage if this is an issue.

David

Eric Mc

125,767 posts

295 months

Wednesday 9th January 2013
quotequote all
I do - but the bulk of them tend to go with the simpler option of just paying it outright or claiming the refund outright.

Then they know the year in question is settled and wil not be rumbling on for another 12 to 18 months.

Elroy Blue

Original Poster:

8,842 posts

222 months

Wednesday 9th January 2013
quotequote all
All complicated stuff. So back to the original question. If they feel I've put something in the wrong box, do I get a polite reminder or a nasty fine.

Eric Mc

125,767 posts

295 months

Wednesday 9th January 2013
quotequote all
They might write you a letter seeking an explanation. Strictly speaking, under Self Assessment regulations, they need to open an enquiry into any return that appears wrong. And the letter you receive can appear very legalistic and rather daunting.

In reality, if you get a letter just telephone them using the contact number given on the letter and they are pretty good at sorting everything over the phone.

Elroy Blue

Original Poster:

8,842 posts

222 months

Wednesday 9th January 2013
quotequote all
Cheers Eric. (All the advice you gave at the start of her enterprise last year is being put to good use. Much appreciated)

Allanv

3,540 posts

216 months

Wednesday 9th January 2013
quotequote all
Eric Mc said:
Do it.

Being PAYE does not automatically mean you shouldn't be completing an SA return.

Are you a higher rate taxpayer?

Do you have income outside of your salary - such as bank interest received, dividend income or rental income?

Do you pay into a personal pension?

Do you make charitable donations under Gift Aid or Deeds of Covenant?
Eric, no to everything so do I still fill one out or get it cancelled?

davepoth

29,395 posts

229 months

Wednesday 9th January 2013
quotequote all
Allanv said:
Eric, no to everything so do I still fill one out or get it cancelled?
I was in this situation this year. I rang up. The man from HMRC ran through a couple of questions regarding my income for the year (all PAYE) and said that I probably didn't, and he would pass it to the team that would make a decision. There is a letter somewhere in the post for me, but the HMRC computer now says I don't need to do Self Assessment any more.

essayer

10,410 posts

224 months

Wednesday 9th January 2013
quotequote all
Do you know that for sure?
I wouldn't trust any info over the phone unless it was backed up by them in writing. I would think about doing a tax return just in case (won't take long if you are just PAYE and have your P60)

Eric Mc

125,767 posts

295 months

Thursday 10th January 2013
quotequote all
Allanv said:
Eric, no to everything so do I still fill one out or get it cancelled?
Do it. Get the thing submitted.

Hopefully, they will see that you shouldn't be completing the things and not issue them for future years.

If they have asked you to subit one for 2011/12 you still MUST complete it and submit it.

sumo69

2,164 posts

250 months

Thursday 10th January 2013
quotequote all
Eric Mc said:
Do it. Get the thing submitted.

Hopefully, they will see that you shouldn't be completing the things and not issue them for future years.

If they have asked you to subit one for 2011/12 you still MUST complete it and submit it.
Eric

Not strictly true - the OP can call them and they now have the power (new this year) to cancel the demand to file the return over the phone which is then followed up in writing.

I have done it for a client that was asked to submit a 2011/12 return but is now a PAYE case having ceased self-employment in 2010/11.

Before you cancel your Self Assessment record, are you going to be hit with the tax on child benefit that is due for 2012/13?

David