When should one register as Self employed with HMRC ?

This question cropped up today during our discussion.

 

I was of the opinion that “within 3 months” of start of business one should inform HMRC by registering as a self-employed.

 

I was challenged on this and informed that latest guidance stated that one can register within 6 months after the end of financial year.

 

I came home and checked guidance is :

 

“Register as soon as you can after starting your business. At the latest, you should register by 5 October in your business’s second tax year.

 

Example

If you start working as a sole trader between April 2014 to March 2015, you should register before 5 October 2015.

 

If you register later than this, you won’t get a penalty as long as you send your Self-Assessment tax return and pay your bill on time.”

 

I think HMRC means by the bill both Income Tax and both Class 4 and 2 National Insurance contributions.

 

But as informed by one of the discussion member, he recently registered an individual in Oct 2015 and mentioned that the individual started work in Jan 2015 but was asked to pay Class 2 NI for last 2 months only.

 

It seems HMRC’s internal computer systems are using the old guidance of 3 months, whereas the guidance to public has changed.

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