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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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, I've had a small business alongside my normal work. Due

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Hi, I've had a small business alongside my normal work. Due to feeling thinly stretched and not able to work a spreadsheet, I put off tax til now it's 3 years due. Having started to get to grips with the figures, on paper if not electronically, I can honestly show it's been an expensive hobby, and if I'd done my taxes on time, I would more likely have recieved than had to give. I just want to wind up legally. Is it inevitable that i will be charged the thousands in overdue declaration charges. Should I just fess up, or would I do better to employ someone to represent me. The accountant I've been in touch with seems nice but a bit clueless. I want to come clean, I expect to pay a penalty, but I'd rather not be financially crucified. Any suggestions?

Are you saying that you made trading losses during the life of the business? What was the nature of the business? How much income did it generate annually? How much did you incur in expenses annually?
Customer: replied 3 years ago.

I've only completed some random months accounts. The business was aesthetics, (botox, filler etc). Whilst there was some profit on actual services, given rent, travel, and that insurance and website costs went from current account, it would mostly break even, unless I included any payment for my time and expertise (I'm talking poss £10.00/hour), when it would show a loss.


Leave this with me while I draft my answer.

Hi again.

You have a couple of choices.

Firstly, you could quietly close the business and hope that HMRC never become aware that it existed. This is risky as you should have registered with HMRC as self-employed but many people start a business only to give up fairly quickly and HMRC are never told. You have been trading for three years so its not as if you gave up quickly.

Secondly, you could write to HMRC, tell them that you started a business three years ago, that you have now stopped trading and having looked at the figures, you don't appear to have made a profit. If you simply register as self-employed and give your start date, you will likely be issued with several tax returns to complete and then the penalty notices will start to land in your postbox.

Take a look here for information on failure to notify penalties. Sometimes HMRC don't require tax returns for previous years and will work out any tax and NIC due manually after having been given the figures. This way, penalties for late submission of tax returns can be avoided but there may be tax geared penalties. This isn't always the way HMRC deal with such cases.

If I were you, I'd put some figures together for each tax year and send them to HMRC at the address here. It may be that you have to register as self-employed even if the business has ceased. If you do and you are issued with penalties, you can appeal against them. There is information on appealing penalties here. HMRC are considering doing away with late tax return penalties in favour of penalties related to tax liabilities which already exist so there is more of a relationship between actual tax loss and penalties. A £1,600 penalty for a tax return which is a year late is a bit steep when there is no tax liability.

If you do write to HMRC and things get difficult, then you should find an accountant or tax adviser who can take up the reigns for you and defend your rights and interests.

I hope this helps but let me know if you have any further questions.

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