The first thing you need to do is NOT TO WORRY! You’re not the first, and you most certainly won’t be the last. Despite the rumours, the HMRC is not too much of an ogre. If you communicate and cooperate with the HMRC and keep them in the loop as you try to rectify your mistake, they will work with you, not against you.

Before picking up the phone and letting them know, ask yourself this question – were you employed on a PAYE basis during the time that you have not submitted any tax return?

Were you PAYE employed?

If the answer is yes, and you have not received any other taxable income during this time, then relax. Your employer would have made your contributions on your behalf, and you are not obliged to make any further declarations.

If you have kept your previous payment slips, then dig them out to double-check. Failing that, for your own peace of mind, you might want to contact your employee to confirm that all your contributions are up to date.

Did you transition from PAYE employment to self-employment during this period?

If there was a crossover period, then your PAYE contributions would have been covered by your employer until the end date of your contract. From that last date onwards, it will have been your responsibility to submit your returns within the tax return deadline and make any payments due.

If you have answered ‘yes’ to this question, then now is the time to contact a professional who will be able to help you, inform the HMRC of your oversight, and rectify the situation.

As a self-employed person, it is your responsibility to know how to do a tax return. If the HMRC has been chasing you, and you have been sent a ‘Failure to Notify’, they may be less understanding and cooperative.

If, however, you have somehow managed to slip under the radar, making the first move should work more in your favour.

I am on unemployment benefits – do I need to complete a tax return?

If you receive job seeker’s allowance and have no other form of income, then you do not have to complete a tax return.

Will I get a fine for not completing a tax return?

Yes. The HMRC has a sliding scale of penalties for the late filing of tax returns in the year in which it is due to be filed.

Up to three months late: £100 for one day after the deadline.

Up to three months late: £10 for each additional day (capped at 90 days), plus £100 initial fine – maximum £1000.

Six months late: As well as the penalties above, either £300 or 5% of the tax due (whichever is higher).

12 months later: An additional £300 penalty or 5% of the tax due (whichever is higher) on top of all fines outlined above. In the most serious of cases, you may be fined 100% of the tax due.

If you have not filed any tax returns to the HMRC for several years then your penalty will be worked out on an individual basis, taking into account: the amount of money you have earned and the outstanding tax due, your ability to pay, your reasons for not paying.

What if I can’t pay?

You can arrange a ‘Time to Pay’ agreement with the HMRC if you lack the sufficient funds to pay the outstanding tax and fines in one payment. Be aware that you may be charged an additional 3.25% interest by choosing to pay in instalments.

What should be the first thing I do now?

Please contact us for guidance. Depending on your personal circumstances we will be able to give you the best possible advice for addressing your tax return issues