Should have registered as self-employed long ago, but didn't. Now Worried sick!!

[MonkeyFace]

Background: After finishing a college course I claimed jobseekers allowance for long enough to enter into a 6 month New Deal scheme.

When this did not lead to full-time employment I could not face signing-on again and so took a small amount of money for walking dogs and mucking out a pair of horses. The money earned was initially only £45-50 a week, which was similar to the jobseekers allowance I would have been entitled too at the time.

Sometime later this rose to £95-100 per-week (but only during school-term time, not all year, the extra £50 was for taking a teachers dogs out twice daily). These are not exact figures as it has fluctuated a little week to week.

I have also been spending upto 10+hrs or so per week looking after my Grandfather during this time after he had a stroke and developed problems. The flexiblity I had was of greatest use when it came to making sure he had help getting to a battery of doctors appointments/tests.

But what was supposed to be a short-term alternative to claiming benefits has now lasted from 2003-2006. I never thought of what I was doing as running a business, or considered NI contributions ect. I had seen that the money I got was less than tax-free personal allowance and so stupidly never worried about it.

But now that I've realised I should have been registered as self employed regardless I'm worried sick!!

I REALLY want to get everything all straightened out but I'm terrified of the consequences of my stupidity. Is it possible to register as self-employed so very late after becoming so?

What sort of things can I expect?

Just how much trouble/fines/penalties could I face?

What about tax enquiries? It's obvious from my bank account that not much goes in or out. But I don't have any reciepts or records of earnings to prove the estimates given above. If required to do so would statements from people like a teacher and a retired magistrate concerning their estimates of amounts they paid for my services be of help?

I live with my parents & younger brother+sister (and am the wrong side of 25). Would any of my mistakes with this situation reflect badly on them at all in any way?

Would I be better to simply try to get a self assesment tax return in for the 2005-2006 year and then pay voluntary contributions for the earlier missed period?

I fully intent to seek guidence from the Citizens Advice and then my local HMRC Enquiry Centres, but I would also be VERY gratefull for any input from this board.

Sorry about the length of the post, but I think just writing this down helped a little too.

[Sherlock]

From the information given it looks as though very little, if any, income tax is due. You should have registered to pay Class 2 National Insurance, and it may be possible to make back payments in order to preserve your State Pension. There is the possibility of a fine for not registering as self-employed.

I would contact the charity TaxAid, whose details are on the internet. One of their professional advisers can guide you through what action to take. Contact them before you disclose anything to the Inland Revenue.

[MonkeyFace]

Thank you so much Sherlock. I'll take your advice and try contacting TaxAid before taking anything up with the Inland Revenue.

If anyone else can also offer any advice, or comments or anything really, I would be very gratefull. Just finding out about something like TaxAid has lifted a little of my anxiety for the moment.

[King_Maker]

Some brief points.

You don't have to pay any income tax unless your income is more than your Personal Allowance, which is as under :

2003-04 - £4615
2004-05 - £4745
2005-06 - £4895
2006-07 - £5035

Remember the tax year runs from 6 April to 5 April, and the first (approx)£2000 above your Personal Allowance is taxed at 10% -e.g. if you earned about £7000 in 2005-06, your tax liability would be around £200.

Class 2 and Class 4 National Insurance may due as well.

[Nureyev]

I heard of a similar case to yours where someone had failed to register as self employed. The judge offered them a choice either pay £1 billion pounds immediately or face death by firing squad!

Im only joking, in my opinion your anxiety is way out of proportion to your 'crime' and any repurcussions will not impact on your family or have any lasting effect on yourself.

From the numbers given you may have no tax liability at all. Your liability may be limited to a £100 fine for late registration and backdated Class 2NI of approx £100 for each year issed.

As you suggest, the problem you may face in the absence of receipts/invoices is proving that your level of income was so low. Hopefully the aforementioned 'TaxAid' can advise you on this.