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Tax problems ahead for self employed
by The Editor at 10:21 23/12/08 (Press)
The self-employed face a New Year tax crunch that could cost them dear, according to a report in the Daily Mail.
This will result from the usual demands to 3.5 million self-employed people for advance tax payments based on the previous year's earnings - but these make no allowance for the economic slowdown.

They can ask for these payments to be reduced to reflect lower expectations by contacting their tax office.
But if business picks up again, they will have to pay interest on the difference - at 5.5 per cent.

John Whiting, tax partner at accountancy giant PricewaterhouseCoopers and a former president of the Chartered Institute of Taxation, told the Mail: "This is an issue well worth flagging up for self-employed people. They are going to be asked for interim payments on tax due for 2008-2009 based simply on what they made in 2007-2008. Yes, they can ask for those interim payments to be reduced, should they expect their earnings to be affected by the economic situation, but if it turns out the Revenue was right, they can be made to pay interest on the difference.

"But if you get it wrong, you have to pay interest. And there are also penalties available to the Revenue if you really frankly were trying it on.

"I would advise people to ask for a reduction if their circumstances have changed, but do not be silly about it."

Full article: Tax crisis looming for self-employed - Daily Mail, Dec 08.

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The Editor

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