HMRC insist on sending a tax return for 21/22, after we've already made a declaration and paid a penalty

[kp278]

Hi, we have been ebaying since 2020 and never told HMRC. Ultimately it caught up with us around middle of 2023, we made a declaration for the periods 20-21 and 21-22 and paid what we owed plus the penalty.

A couple of months later we sign up for self-assessment in readiness for submitting the 22-23 tax year and receive a letter asking us to complete a tax return for 21-22.

We spoke to them but they insist because we were self employed in that period and earned over £1k we reach the threshold for submitting a tax return. In our eyes we've already paid the tax owed for 21-22. What am I missing?

Many thanks

[Lambs]

K,

When you say "we've been eBaying", what have you been selling on eBay?

is it:

Stuff you bought for yourselves but are now getting rid of, or

Stuff that you bought ONLY to sell on at a profit, or

Something else?

Regards,

Lambs

[kp278]

Stuff we bought to sell at a profit

[D&C]

Surely the correct way to resolve this is to contact whoever from HMRC "caught up with you".

[kp278]

Could you be more specific?

“We spoke to them but they insist because we were self employed in that period and earned over £1k we reach the threshold for submitting a tax return. In our eyes we've already paid the tax owed for 21-22. What am I missing?”

[bd6759]

“Whoever caught up with you” will be the person with whom you negotiated and agreed the the tax due for 20-21 and 21-22.

[Lambs]

"Person"?

I suspect that K will have used a disclosure facility that involved minimal effort/interaction on HMRC's part.

Regards,

Lambs

[Lambs]

Having re-read the initial post I see it could easily be interpreted as having been initiated by HMRC rather than by the querist as taxpayer.

I should say that the obligation to file a Self Assessment Return still stands, despite any disclosures made in relation to 2021/22 specifically in relation to eBay trading.

If all tax affairs are now "present and correct", then the 2021/22 return should effectively tell HMRC only what it already knows. It will of course include the income that has been recently disclosed - but K will also include the relevant proportion of the tax in turn paid, in settlement thereof (the 2021/22 element). There is a potential practical issue in terms of recognising any amounts paid that were allocated otherwise than under Self Assessment but K's liability for the year is unchanged.

I doubt that HMRC will decide to forego the 2021/22 tax return simply because of a previous settlement. I suspect that HMRC would have liked to send a Notice to File a return at or shortly after the time that the eBay disclosure(s) was ongoing but HMRC is struggling to keep up at the moment.

Regards,

Lambs

[bd6759]

The settlement contract requires HMRC to give up its right to assess the tax. It cannot now insist on a self-assessment of that same tax.

He should ask for the return to be withdrawn.

[Lambs]

K did not mention a CONTRACT settlement?

I am not sure that TMA 70 s 8 includes an "I've already paid you all the tax I owe" provision as a defence against a notice to file.

I mean, it would be absolutely awesome if it did.

Regards,

Lambs