Do you need to notify HMRC?

I had to refer to HMRC’s ‘Penalties for failure to notify’ recently. It contains some useful information on what constitutes a failure, the penalties imposed and how these are calculated.

One obvious problem with notifying HMRC is the ‘ignorance is bliss’ syndrome. How and when do you know you have failed to notify? It is all too often discovered on receipt of the letter through the post informing you of the penalty.

There are two notable deadlines for newly self-employed:

  1. You must tell us that you’re due to pay Class 2 NI contributions within 3 months from the end of the calendar month in which you started;
  2. Your profits from self-employment first make you chargeable to tax – you must tell us within 6 months of the end of the relevant tax year

Clearly, (A) is much more pressing than (B) and most will need to go with (A) – which is tough given that you are probably a long way from thinking about any taxes to be paid at that stage.

VAT registration:

Your business exceeds the VAT registration threshold – you must tell us within 30 days of this happening

Consequently, you will need to know what the VAT threshold is.  You should also be monitoring your Sales on a monthly basis throughout your accounting year. Your accountant should also, in my view, make you aware of this and/or be monitoring the situation on your behalf.  However, it would be advisable to have the conversation well in advance

And on a more light-hearted note:

Brew beer – you must register with us at least 14 days before you intend to start brewing

You have been warned!

If you know you have missed a deadline or failed to notify, my advice is to act on it quickly and talk to HMRC. In my experience, they are helpful and supportive if you can provide them with information and prove that you are making concerted attempts to put matters right. This is the link to the 6-page document.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/677811/CC-FS11__01_18.pdf