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We have all come across people who have never joined the ‘taxpayers’ club’. Many of them will have done so deliberately in the hope of never being found, but there will be a fair number who did not set out to evade their responsibilities but who kept putting off contacting the revenue until it became psychologically almost impossible to come clean. I remember in my early days as an inspector a case where a self-employed dentist had spent five years outside the system. It was only in the year she got married and was asked by her new husband (also a dentist) whether they should use the same tax accountant that she faced up to her responsibilities. That must have been an interesting breakfast conversation.
So, bringing people into the system at the right time is important. The current system is frankly a bit of a muddle – not least because there are three separate steps here – notifying liability, registering for self assessment, and filing a return – with only the first and last being legal obligations. So I support HMRC’s recent call for evidence asking for views on the case for reforming income tax self-assessment registration for the self-employed and landlords (tinyurl.com/hmrccallevsell).
It seems odd that the obligation to notify is not linked to when a business starts and that in extreme cases it can be 18 months before the obligation arises. There will be different views on what the correct time scale should be, and I strongly recommend that readers who deal with small businesses look at the HMRC proposals and offer feedback, either directly to HMRC or through Taxation. This is an important issue which deserves the fullest consideration.
