I have been employed for over 15 years and the employer paid all my taxes. I am not a higher bracket tax payer.
About 5 years ago I started selling a Kindle book. It's a public domain book that I compiled for my own use but then thought I could sell it on Kindle since it already works on my Kindle.
I made about £1000 a year from it for a couple of years and it slowly diminished to around £500 or less.
I never paid the tax because it's withheld in the USA ( 30% taken either by the IRS or Amazon holding it until I clear it up with the IRS - I don't really know), so I thought I don't need to pay it here since the Americans have taken my tax.
However I was in the process of setting up my own company for freelance work and when reading about taxes I realised that I need to pay this.
I am worried about penalties and interest. I tried the HMRC penalty calculator and it's £1600 a year plus the amount of tax I might owe. What is the best option for me? Should I try my best to gather the £7000 or so and pay it to them right now. Or should I contact them and explain what happened, hoping that they might give me less penalties.
I don't know if I need to pay NI on top of the Income Tax. What I am worried about most is how this will affect my new business. Will HMRC want to audit everything I do from now on? I have no other outstanding taxes.
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