The number of people making extra income from sites like eBay soared dramatically last year. For example; 80,000 people began renting all or part of their own homes just through AirBnB and reports show this is doubling annually. It’s often called the sharing economy and includes micro entrepreneurs who sell a product or service online.
Sharing economy tax free allowances
The government announced two new tax allowances for the sharing economy sector in March this 2016. You can earn up to £1,000 tax free from property and providing goods or services. The cause for concern is that many micro entrepreneurs have not realised that they don’t come into effect until April 2017. This means that tax must be paid on all of these ‘sharing economy’ profits up until next year.
Tax Returns
Taxpayers are obliged to inform HMRC of taxable income via the self-assessment process. There is a ‘disclosure deadline’ to be met and you can be issued with a fine for 100% of your tax bill if you are late. This year, the deadline was 5th October.
Likewise, there are financial penalties if you miss the tax return filing date of 31st January 2017. 870,000 taxpayers missed this deadline last year and were fined. ‘Free Agent’ accountancy firm predict that this figure will top 1 million this year, through the high volume of people involved in the ‘sharing economy’ and mass confusion about the new tax allowance deadline.
Unfortunately, ‘I didn’t know’ is not on HMRC’s list of ‘reasonable excuses’. As reported in The Telegraph, a partner at Saffery Champness, Lucy Brennan, said: “People cannot use the fact they were unsure about their income or how much they owed as a reasonable excuse not to have filed a return. People need to be on top of how much they owe and avoid having to phone HMRC around the end of January when they may find they spend 40 minutes or more on the phone just waiting to speak to someone.”
Help is at hand – Tax Rebate Services offer a popular ‘Self Assessment Penalties Appeal Service’ for those who have received, what they consider to be, an unfair fine for late filing. Firstly, we look into your tax situation, confirming your late penalty appeal’s validity. We will then submit your appeal to HMRC and tackle any subsequent communications with them.
Where to start
Micro entrepreneurs usually see HMRC as their first port of call with any queries about their tax situation and are encouraged to phone the HMRC helpline with their questions. If you want to avoid big penalties by getting things wrong and lengthy phone calls to the tax office our tax return service can get you through the process with ease.
The onus is on you
HMRC does need taxpayers to monitor the system in order to iron out any mistakes and just grumbling about an unfair fine will not result in in being cancelled, you need to follow their appeals procedure. Quite a lot of the fines are issued automatically through the computer system, so some errors are expected. A computer cannot make decisions about the reasonableness of someone’s excuse for late filing. HMRC accept legitimate reasons, such as software malfunction, postal delays, a death in the family and your personal illness. We can take your through the appeals process to get your unfair late penalties overturned and, sometimes, discover that you are actually owed money from HMRC.
As the ‘sharing economy’ sector continues to grow, so does the potential for unseasoned taxpayers to make genuine self-assessment mistakes. We can support you through the somewhat daunting process of rectification and make sure you are only paying your fair share of tax.
