Contractors' Questions: Will HMRC fine me for being unregistered?

Contractor’s Question: I’ve just started IT consulting for a few local businesses this month so am thinking of registering with HMRC. But I read somewhere on their website that you can register anytime within three months of starting up your own business. Is that right?

And is it true that you can earn a certain amount freelance, both without declaring the sum under this amount, and without having to register as self-employed? Also, I’m leaving the UK in mid-March so would I still need to register? It seems silly to start a registration process then leave straight away. But I don't want to get fined. Will I?

Expert’s Answer: HMRC no longer fine you, as they used to, if you don’t register your freelance activity within three months of starting.

The rule now is that you must register by October 5th following the end of the tax year in which you started your business. As the tax year runs from 6th April one year to 5th April the following year, if you started your business in January 2018 then you have until 5th October 2018 to register.

That said, if your self-employed income is under £1,000 in the tax year and you don’t have to fill in a tax return for any other reason, you won’t have to file a tax return. Whether you would need to pro-rata this figure if you start your trade part-way through the tax year is something I’ve been unable to find the answer for, so I would suggest you phone HMRC’s self-assessment helpline.

Lastly, you haven’t said whether your trade will cease when you leave the UK, but there is guidance on this from HMRC. Good luck!

The expert was Emily Coltman FCA, chief accountant at cloud accounting software specialist FreeAgent.