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
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
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
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 www.inlandrevenue.gov.uk/startingup
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 email@example.com
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
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