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10 January 2001

UK Inland Revenue Announce Fines For Late
Start-up Registration.

A campaign to get people starting their own business to register immediately with the Inland Revenue was launched today by Paymaster General, Dawn Primarolo.

This means new businesses will get help from the outset and avoid drifting into the hidden economy.

• A new helpline will take registrations over the phone for the first time.

• People who register will be issued with a new Starting up in Business guide covering everything about tax, National Insurance and tax credits someone starting to work for themselves needs to know.

• From now on the newly self-employed will have 3 months to register - and if they do not they could face a penalty of £100.

Dawn Primarolo said :

"The Government is committed to helping small business to start up and grow and help them understand and meet their obligations. The Inland Revenue has opened a helpline for new registrations and produced the Starting up in Business Guide, which will be extremely valuable to anyone setting out on the path of running their own business.

"But we are not prepared to allow honest businesses to be undercut by those in the hidden economy who are determined not to pay their dues, so we are also introducing a penalty for those who fail to notify the Inland Revenue about their new businesses. Our intention is fairness for all."


This package of measures came out of the recommendations in Lord Grabiner's report on the informal economy that there should be an effective requirement to notify the Inland Revenue on or soon after the start of business, and that more and better help should be offered to new businesses in understanding their responsibilities.

The registration process will be easier by making the existing registration form shorter and more straight-forward to complete and providing telephone registration facilities.

The registration for Class 2 National Insurance contributions (NICs) will also be treated as notification for tax and Class 4 NICs purposes - so that the newly self employed will only need to notify the Inland Revenue once.

On registering the newly self-employed will receive a new Starting up in Business guide. It explains about tax, National Insurance, VAT, tax credits and the records that should be kept. It's specially designed to provide integrated, step by step guidance in as plain a language as possible on what to do when starting, maintaining and expanding the business. It also signposts other help and advice useful to small business.

They will be able to get face-to-face help from the Inland Revenue's Business Support teams and a dedicated helpline.

The Inland Revenue are also launching a new video for people thinking about working for themselves "Starting up in business - cutting through the red tape" It trails the guide, registration and other help and advice the Revenue offer small business.

The existing requirement for the newly self-employed to notify the Inland Revenue immediately of their liability to pay Class 2 NICs will be backed up by a new £100 penalty if they fail to register on time without a reasonable excuse.

Anyone starting up as self-employed must now register with the Inland Revenue within three months - starting from the last day of the month in which
self-employment began.

So anyone who began self-employment in January 2001 or earlier and does not register by 30 April will incur the new penalty from 1 May.

People who are worried about owing tax and NICs because they are already working in the informal economy can ring the Tax and Benefits Confidential Advice line to find out exactly where they stand on a no-names basis.

Contacts & Background information.

The Helpline for the Newly Self-employed opens today (10/01/01) on 08459 15 45 15.
It is open 7 days a week from 8am to 8pm and calls are charged at local rates.

A new leaflet P/SE/1 'Thinking of working for yourself?' Explains how to register and tells people thinking of starting up how they can get a free video which shows what may be involved. The leaflet is available from the Helpline for the newly self-employed, Inland Revenue Enquiry Centres, Jobcentres, Business Links, other appropriate locations and on the Inland Revenue's website

The Starting Up in Business guide is also available from the helpline and on on the website

The Social Security Contributions (Amendment) Regulations 2001/45, (Northern Ireland) 2001/46 introducing the new penalty were laid today, and will come into force on 31 January 2001.

The Inland Revenue's consultation paper on these measures, Starting up in Business, and a summary of the responses to it and the regulatory impact assessment may be obtained from or on the consultation register on the Inland Revenue's website

The Tax and Benefits Confidential Advice line is on 0845 608 6000, open 8am to 8pm Monday to Friday and 8am to 5pm Saturday and Sunday.
Calls charged at local rates. It was introduced last June to encourage people to put their affairs in order before new measures to stop on people drifting into the informal economy came into force.

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last modified: 10-Jan-2001