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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have done some ad-hoc freelance work (marking exam papers)

Resolved Question:

I have done some ad-hoc freelance work (marking exam papers) on and off for about 12 years. I always declared it on my self assessment - the amounts were generally around £1500 per year - but I never realised that I should have registered as self employed or paid Class 2 NICs (the amounts were too small to pay Class 4 and the tax return process makes no mention of Class 2). It was only when looking into setting up a business properly, as it were, that I realised I should have done this and now potentially owe many years Class 2 NICs. I am in a panic as I could face a very hefty bill, presumably with penalties for non-registration and non-payment of the Class 2 contributions. I have kept records for 6 years, but I have no precise details further back. What should I tell HMRC?
Submitted: 2 years ago.
Category: UK Tax
Expert:  Tony Tax replied 2 years ago.
Hi.

If your earnings were around £1,500 per annum, you have been the level at which you should pay Class 2 NIC, though you are strictly supposed to claim small earnings exception or deferment before the start of the tax year. Take a look here for more information. Given that you have been disclosing the ad-hoc work, if I were you I wouldn't bother to register as self-employed unless you see the earnings reaching the level at which you should be paying Class 2 NIC.

Let me know if you have any further queries.
Customer: replied 2 years ago.
Thanks for that. My earnings did reach that level in 2010-2011, and have again for 2011 - 2012, but again it was only in the last couple of months that I realised my error, so should I register retrospectively beginning April 2010 (still presumably incurring a penalty) or just register from now? I wonder to what degree HMRC is likely to start digging into my records at the point I register?
Expert:  Tony Tax replied 2 years ago.
I would register for 2011/12 if I were you. They don't always issue a penalty. I doubt they will look at earlier years as you have been disclosing the income. They also are not overly proactive in chasing for payment of old Class 2 NIC either. They will issue statments but you'll never get a phone call about it.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14012
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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