Late SE Registration

jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
Am on HMRC's site trying to see how much the penaly is for failing to register as self employed in time, but am going round in circles and need to get on with some work.

Am I right in thinking the new penalties are a % of the unpaid Class 2 NIC?


  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
    It depends on how late you are really. In my experience, if you get your client registered and paid up-to-date with NI and then get his TR in on time, it usually runs smoothly and without penalties. Or perhaps my clients have just been lucky!?
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    % penalty based on "potential tax lost" i.e. if any tax was unpaid at the due date of payment, then a % dependent on behaviour applies.

    Yes, I assume class 2 NI comes into this as well but am not actually sure.
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
    This is what I read and was unsure if applied to both tax and NI or one or the other:

    Q41. Why did HMRC remove the £100 fixed penalty for Class 2 National Insurance contributions?

    Before 1 April 2010 there was a fixed £100 penalty if someone notified, more than three months late, that they had commenced self-employment.

    During the Powers Review consultation in 2008, customers, accountants and representative bodies stated that this penalty was counter-productive. It could, at a crucial stage, damage relations between HMRC and customers.

    Although the fixed penalty reinforced the obligation for early notification it did not encourage people to come forward. It often meant the first response from HMRC to a new business that approached it was to impose a penalty.

    The new system is more proportionate because a penalty will be related to the amount National Insurance contributions unpaid because of late notification.

    Thanks for your comments guys, its ok after all though. A man rang me this norning saying he'd retired in March 2010 and set up a consultancy business but hadn't registered and wasn't paying any NIC. Fortunately he didn't start until January this year.

    When I showed him the class 2 small earnings exemption figure of £5075 he thought that was per week! I refrained from laughing out loud.
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