Hi folks, ive just read this on another forum and thought you may need to know. Apparently the IR are checking that all small businesses are registered. Im sure everybody here is registered but thought it may be of interest.
yep all registered here and legal, but you’d be surprised how many are not
I’m always amazed at how many small businesses don’t think they need to be registered as they’re ‘‘not making a profit’’ or are under the tax threshold.
The Inland Revenue are really helpful IF you are upfront, honest and register - which is a very quick process - but - quite rightly - come down hard on an unregistered business.
When you say “registered”, do you mean that you fill in a tax return as that’s all I do (just done my return yesterday and made £49 last year, whoop, whoop) - do I need to do anything else?
It’s about time! There’s so many of us being honest, and yet there are lost who think making money from craft doesn’t need to be a declarable income. I know some people are genuinely not aware that they should declare this kind of extra income, but there are plenty who know full well that they should but just don’t care - grrrr! (I know a couple like this who have had a go at me for telling people I am registered, but then they feel guilty because they know they should be and aren’t, but they have a go at me, even when I’ve not said anything about their business, hence the ‘grrr’)
It used to be the ‘rule’ that as soon as you offer your goods/services to the public with the intention of making a profit (whether or not you actually do) - be it online, at craft fairs or any other way - you need to register with hmrc as self-employed. There are penalties for not doing so within a certain time period, but I don’t recall the details.
It should be done immediately when first sale is done or is about to happen.
Unreported income is one thing, but it is just unfair if you consider the amount of time we have to spend on bookkeeping and filing returns when we could just use that time for crafting
Sara I sympathise with your 'Grrr’
I was at a craft fair about a year ago, only a small event with about 20 stalls or so. A young man turned up and started looking around and asking questions about how things were made, etc. After an hour he was still there and some of the stall holders got a bit twitchy thinking that he might be ‘a secret inspector from the IR’ as they put it. They started hiding business cards and anything with their names or contact details. One even left the hall and waited outside until she saw him leave. I happily chatted to him for quite a while, gave him my business card and he bought a necklace for his Mum. After he left I was pulled to one side and interrogated by the other stall holders about what we’d said. Turned out that I was the only registered person at that event. The others knew that they should be but did nothing in case it ‘had an impact on their pensions or benefits’. He was probably just a pleasant young man looking for a gift for his mum, who knows, but the panic that swept through that room at the mention of the IR was quite an eye opener!
You have 3months from seting up and registering with them.
I got a £10 tax rebate when I did mine for the last year.
I know what you mean about people having a go and saying just don’t tell them. grrrrr sorry I don’t want to get into any kind of trouble it’s not worth it I’d rather be an honest business and have everything above board.
Well said, Eileen.
I thought you had something like 6 months after your first tax year to register before you were liable for fines? Can’t remember all the details now, it’s a while since I registered.
Steph I think you’re thinking about when you have to have your tax form filed in ie compile your tax refund.
You have till October at the latest if you do it online, so that would be 8months from the end of the financial year of 5 April. But be aware as signing up to do it on line can take up to 7 working days for them to send you back your special identification code so you can complete their online tax forms. If your taxes are not done on time it’s a fixed amount fine and then £25 per very extra day you are late. Even if it turns out you don’t owe them any tax or even if it turns out they owed you a rebate.
But you can start your business and register it with the tax office up to 3 months after starting. It’s the Grace period.
Yes perhaps that’s what I was thinking of. It’s a while since I registered my business and I always do my tax return in May, so I don’t dwell too much about the deadlines.
Eileen, the October deadline for tax returns applies to paper-copy forms only. For online filing, you have until the following January to get it done, so that’s nearly 10 months from the end of the tax year. I usually get mine done within a few months, especially if they owe me money!
Edited - sorry Eileen, I think you were referring to registering for self-assessment, which is indeed a 5 October deadline, in the year after the end of the tax year in which you start trading.
Oh yeah, you have to register with HMRC as self employed or you can face a penalty if you don’t. If you are not self employed, you still have to get in touch with HMRC to get advice about declaring your income.
I have registered and did my taxes today.
I registered as soon as I opened my Folksy shop and my tax returns don’t have to be in until the end of Jan each year.
I am in the enviable position of not having to pay NI etc as I am a pensioner and I am also super lucky to have a friend who is a registered accountant and does it all for me. There is no way I would ever be taxable unless some of you want to offer me £5000 for one of my paintings…lol.
I also get angry at those who think they can get away without registering. Even though I KNOW I will never have to pay tax, I STILL keep books of every penny I earn and every penny I spend.
I have always found tax inspectors really helpful people. I remember being at a craft fair and the organizer made an announcement that the Tax man was in the room and that you didn’t have to say anything if you didn’t want to !!! I showed the gentleman what I made, how long it took me and showed him my diary of when I did fairs…he was charming and even bought something from me too. I gave him my business card willingly. If you have nothing to hide, you have nothing to fear. They are not there to pick on people, they are there to do their job.
Ciesse you are right it’s the October for the paper filing or the next January for the online deadline for filling.
Liz, you are so good getting yours done so early, mine is a last minute panic over Christmas usually for the January deadline! People take a chance, that’s up to them, I registered as full time self employed with a small business - I personally wouldn’t sleep if I hadn’t. This thread has prompted me to be more organised and get my return done earlier though so thanks for the push
I am surprised by some craft fairs letting people sell if they are not registered if that is the case. Every craft fair I’ve done I’ve had to show proof not only that I am registered with the IR but that I also had insurance. Maybe some organisers just make it too easy for non business registered people to sell at craft events. They should not as craft fairs are not the same as the table top clear your clutter type of sales that is for people getting a bit of extra cash for a clear out because it’s crafts people earning a living from their businesses and that has to be supported properly by all involved.
@lizdyson, technically you should also register to pay the basic National Insurance stamp. However, if you can demonstrate that you make no or very low income (£49 isn’t a lot yet, is it?), then you can claim exemption. You can look on the HMRC website and there’s info about NI. They were really nice when I spoke with them on the phone.
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