What is Form CWF1?
Are you planning to become self employed? Or are you starting your own business? You need to inform HM Revenue &Customs of your intention to do so. You will have to fill in a form CWF1 form to formally announce your intention to HMRC. This is necessary to ensure you are charged with right amount of income tax and National Insurance Contributions.
Form CWF1 can also be used to notify HMRC of your intention to register for VAT. However, in case you are registering for self assessment but are not self employed, you will fill SA1. CWF1 should only be used by sole traders and all individual partners in a partnership. Each partner will fill in their own CWF1 to register as self employed with HMRC.
We recently published TAX FACTS 2019- EVERYTHING YOU NEED TO KNOW ABOUT THIS YEAR’S TAX RATE AND ALLOWANCES be sure to read it.
What happens if you do not notify HMRC with CWF1 form?
“Failure to Notify’ has its own penalties. The deadline to fill and submit a CWF1 is first 31st January following the tax year you became self employed in. For example, if you became self employed on 1st February 2016 (tax year 2015 to 2016), your deadline for successful completion and submission for Form CWF1 is 31st January of 2017.
‘Failure to Notify’ penalties will be levied on both income tax and National Insurance. Penalties are categorised in three ways. A deliberate and concealed failure will incur 100% tax due fines. A deliberate but not concealed failure will get 70% of tax due fines. Lastly, a failure that was not deliberate will get only 30% of tax due fines.
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All penalties are payable over and above tax due amount. You will also negatively impact your future state benefits like pensions. This is because a failure to notify will lead to incomplete National Insurance Contributions records. National Insurance penalty is calculated on amount unpaid. If you voluntarily inform after deadline, HMRC may reduce your penalty.
What do you need to complete Form CWF1?
CWF1 form can be completed only by people who have a National Insurance Number. If you do not have one, you need to book for Evidence of Identity interview with Jobcentre Plus. You will also be asked to give your UTRN on the form. Even if you have already filed your self assessment, you will complete CWF1 as formal notification of intention to become self employed.
In case you want a tax representative to handle your tax issues with HMRC, you will fill a form 64-8 and submit it along with your CWF1 form. 64-8 is a formal authorization to the tax representative and HMRC will not talk to him/her without one. Form CWF1 is available online and can be submitted there. Alternatively download, print, complete and then post the form to HMRC.
SOME FREQUENTLY ASKED QUESTIONS ABOUT CWF1
WHAT HAPPENS WHEN A NEW PARTNERSHIP APPLIES FOR A UTR SETUP?
Although this may sound complicated, but if you are applying for UTR setup of a partnership, you will have a CWF1 form for each partner (even if they are already registered as self employed) and a form 64-8 for partnership. For a new partnership itself, you will fill SA400. For each partner a Form SA401 will also need to be completed. For partners who are not individuals, complete SA402.
COMPANY DIRECTORS NEED TO REGISTER FOR SELF ASSESSMENT. DO THEY NEED TO FILL OUT CWF1 ALSO?
To answer straight forward, NO! Directors are actually company employees. They are not self employed and the form CWF1 is only for people intending to become self employed.
A FAMILY MEMBER REGULARLY DOES WORK HOURS IN A SOLE TRADER BUSINESS? WILL THEY NEED TO FILL CWF1?
Again No! you will be considered self employed only when you are working in a business that is in your name. if a wife works in her husband’s shop; for example, she is not self employed but an employee in her husband’s business. Legal form will supersede the commercial reality.
WHAT IS DEADLINE TO FILL CWF1 FORM?
You must have filled and submitted your CWF1 by 5th October in your business’s second tax year. failure to do so leads to heavy penalties.
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