People who became self-employed during the 2016/17 tax year have until 5 October to register online for self-assessment before they risk facing large HMRC penalties.
Fines for failing to register for self-assessment in time can be as much as 30 per cent of tax owed, as new research has shown that in previous years, as many as one in four small business owners failed to meet the 31 January deadline to submit tax returns online.
The 2016/17 tax year came to an end on 5 April 2017. For individuals who became self-employed prior to this date, failure to register for self-assessment before the 5 October cut-off could result in HMRC imposing a 30 per cent penalty unless tax is paid in full before 31 January 2018 – the next online tax return deadline date.
Ahead of the 5 October deadline, research conducted by small business tax consultants Informi found that many small business owners struggle to meet deadlines imposed by HMRC. Some seven per cent of owners responding to a recent survey said they’d missed the 31 January online tax return deadline on multiple occasions.
Small business owners who missed this deadline last year were fined £284.56 on average, with the HMRC penalty exceeding £500 for one in seven late returning business owners. Two per cent of those who missed the deadline were faced with a penalty of more than £800.
Urging the self-employed to register self-assessment as soon as possible, product manager at Informi, Darren Nicholls, said: For those who have never had to complete one before, submitting your tax return can be a timely process and it’s better to get it done sooner rather than later, when your earnings and receipts are still close to hand.
“The first step – of registering for self-assessment – must be completed by October 5 if you were self-employed or earned additional income in the last tax year.
“Missing this deadline isn’t the end of the world, but with many small businesses being cash-poor, especially in their early stages, it’s a shame to waste money by failing to register in time.”
During the registration process, HMRC issues Individuals with their own Unique Tax Reference (UTR) number which is needed to complete the self-assessment process.
Earlier this year, HMRC published statistics which showed 840,000 people – roughly seven per cent of the total number of workers required to file tax returns – failed to meet the 31 January deadline.
On 1 February 2017, the government was therefore able to immediately claim £84m in fines, discounting additional fines accruing from that date onwards.
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