What is the purpose of completing a Self-Assessment?
Self-employed people, like everyone else, must pay tax to HMRC. HMRC’s problem is that they can’t track self-employed incomes in the same way that they can for others. A Self Assessment form (indicating income and spending for the tax year) must be completed to determine how much tax a self-employed worker owes.
Missing the deadline will result in a £100 penalty, which will increase by £10 each day for up to 90 days if the deadline is not met. You’ll also be charged interest on any taxes that aren’t paid. In rare situations, if the taxman detects willful avoidance, you may be prosecuted.
No matter how new to self-employment you are, HMRC expects you to file accurate tax returns on time. That’s why knowing how to file a tax return before it’s too late is so important.