First Self Assessment

[Hicks]

Good evening

I am in the process of completing my first ever SA for the 2007 - 2008 tax year.

During this period, I wasn't working or claiming any benefits which was a conscious decision on my part. Prior to this, I was employed full time where I paid Tax/NI via PAYE.

Therefore, my income was minimal and, hence, I expect my tax liability to be small.

Will HMRC look at the fact that I have gone from a scenario where I was paying a healthy amount of tax to one where there may be none to to pay as a reason to investigate further or should I not really be concerned by this?

Would welcome your thoughts.

TIA.

[xoggoth]

If a business registers a major change in income or expenses for no obvious reason maybe according to the recent Times article. (See recent CUK) If it is plain you simply have not done any paid work, probably not. Why not explain that in the notes? (If you can get them to work that is)

[Hicks]

If a business registers a major change in income or expenses for no obvious reason maybe according to the recent Times article. (See recent CUK) If it is plain you simply have not done any paid work, probably not. Why not explain that in the notes? (If you can get them to work that is)

Yes, I saw the article you mention in The Times which is what raised my concerns.

However, this is relating to a personal tax return.

Would the points in The Times article still apply?

[Gonzo]

Yes, I saw the article you mention in The Times which is what raised my concerns.

However, this is relating to a personal tax return.

Would the points in The Times article still apply?

I don't think anyone is able to say conclusively, which is not a lot of help if you are concerned.

In the tax year that I started working through a Ltd Co, I spent the first 5 months working PAYE as a permie (my annual earnings were in the higher rate tax bracket but I hadn't got to that point in just those 5 months). The rest of that tax year I only declared dividends that kept my total earnings below the 40% tax threshold.

That meant that I had paid too much PAYE and eventually I HMRC paid me a refund, once the tax return was submitted. HMRC have not queried any of that with me. Some might say that it helps having your tax return submitted by an accountant, but we don't really know. And having said all that, we are not past the period yet where HMRC could still open an inquiry.

You are not alone. We all live with the knowledge that one day, it might be our turn to win the HMRC lottery and get our returns inspected. So, just make sure that all your books are in order and all your expenses legitimate and you should be OK.

But do take out some tax investigation insurance, whether this is through joining the Professional Contractors Group or some other sort of professional expenses insurance.

In the event that Hector does come knocking, defending yourself is unwise and decent representation is expensive.