4 reasons why the tax authorities often penalise self-employed

There are reasons why a business can end up with a Finance sanction. Failure to meet deadlines, procedures or, worse, make statements with erroneous amounts. These are the four reasons why the Treasury usually sanctions the autonomous.

The self-employed are in constant contact with the Treasury and this increases the likelihood of ending a sanction. An erroneous data, a declaration out of time or skipping any procedure that marks the Treasury are just some of the most common infractions.

The General Law defines tax infractions as “malicious or guilty actions or omissions with any degree of negligence that are typified and sanctioned as such in this or another law”. These can be mild, serious or very serious. The main advice that tax advisors give to freelancers when they receive a sanction of this kind is to face it as soon as possible.

And, “contracting debts with the administration is anything but recommended” as explained by the president of the Spanish Federation of Professional Associations of Tax Technicians and Tax Advisors. To which he added that “it is impossible to get rid of these obligations, the only thing that an autonomous can do is to postpone them.”

In fact, one of the criticisms that they make from the sector to the Second Opportunity Law – regulation that allows the owner of a business with debts to negotiate with the creditors a series of removals or deferrals in order to cope with the debts – is that does not include obligations with the Administration. At the beginning of July, the Supreme Court issued a judgment in which it granted the commercial courts the ability to decide whether to forgive up to 70% of the debts that the self-employed, in insolvency situations, had contracted with the Public Administration.

Regardless of the future failure of the courts, the first thing for the self-employed is to avoid contracting debts with the Treasury and, the second, is not to be sanctioned.

What are the most common Treasury sanctions for self-employed workers.

Knowing what they are is the first step to avoid them.

1. Failure to make quarterly VAT returns

Self-employed workers are obliged to make a quarterly VAT declaration of their activity. The self-employed usually forget to include the invoices issued in this service. The problem occurs at the end of the year, when the self-employed person makes the annual VAT summary, which does include all invoices. The Treasury then sends a requirement because the data of the quarterly statements do not match those provided in the annual summary. The Tax Agency, after checking the invoices, will give the professional a deadline to enter the difference between the correct result, and the one entered at first.

This error is considered as a tax infraction and is sanctioned according to what is established in article 191 of the General Tax Law (LGT), with the payment of a penalty of between 50 and 150% on the amount without entering.

2. Failure to meet the term of benefit

The quarterly VAT declarations, the informative ones or the RENTA itself have a specific period of presentation, marked in a fiscal calendar created by the Tax Agency. Failure to comply with it is sanctioned based on the result of the statement:

If it was ‘payable’, Article 191 of the LGT applies, whereby the autonomous will have to pay between 50% and 150% more depending on the amount. On the contrary, if it goes ‘to return’, the result is zero or is an informative declaration, the sanction is carried out in accordance with the provisions of Article 198 of the LGT, which will consist of a fine of at least 200 euros.

3. Not be neat with mandatory accounting books

Self-employed workers are required to record clearly and accurately the income and expenses of their activity in the accounting books. If these are not carried as it should, a tax offense would be committed that is punishable by a fine of 150 euros, according to Article 200 of the General Tax Law.

4. Do not make invoices correctly

The invoices issued by the self-employed, whether for the sale of a good or for the provision of a service, must comply with a series of requirements required in Royal Decree 1619/2012, of November 30, which approves the Regulation regulating billing obligations.

Failure to comply with these requirements or not keeping invoices is a fine of. at least 150 euros, as provided in article 201 of the General Tax Law. The recommendation is to “carefully” review the issuance of invoices to verify that all the necessary data is correct, that the numbering is correct and that there has been no jump between one invoice and another.

Recommendations to avoid penalties

Finally, a series of tips to avoid being sanctioned:

1. Be informed of the tax obligations and the delivery terms. For this, it is important to know the fiscal calendar that marks and follows the Tax Agency. Likewise, the deadlines for submitting the quarterly statements must be submitted within 20 days of the end of the calendar quarter, and the annual summaries in January of the following fiscal year.

2. Issue invoices correctly and following the rules set by the Royal Decree.

3. Address AEAT notifications. Currently, the Tax Agency has the system of ‘notifications’ that allows to receive the notices of any Public Administration through an email. Self-employed workers are not required to register for this system, however, its use is recommended.

Asesoria Orihuela Costa helps you to avoid these fines

Source: Autonomous and Entrepreneur