Mistake in entering revenues as BIC throughout the year (not BNC)
In preparing my family’s 2022 tax return for 2021 income, I realised that I’ve been entering turnover in the quarterly URSAAF filings in the wrong field. Specifically I’ve been putting them in ‘646 - Prestations de services (BIC) et versement liberatoire de l’impot sur le revenu’, as opposed to ‘685 - Prestations de services (BNC) et versement liberatoire de l’impot sur le revenu’.
My micro-entrepreneur registration was however under the liberal profession (i.e. BNC), not BIC.
For further info I have opted for quarterly tax payments, alongside the social contributions - liberatoire.
As this is my first tax filing I am doing this on paper and I’m trying to work out the best way to deal with this mistake. A calculation using the official Impots simulator shows I would not be due to pay any income tax this year, under either option - BNC or BIC. My understanding is that from an URSAAF perspective, the only difference is that BNC tax pre-payments are deducted at a slightly higher rate.
The options I’m considering are:
1. Simply record my turnover this year as BIC (in box 5TB)
As I would not be due to pay any tax this year, using either option (BNC or BIC), the government won’t be missing out on revenue if I do this. My return will match the URSAAF records perfectly and I would therefore not expect to trigger an exception and I would not expect to hear anything further. I can switch to BNC for my future quarterly URSAAF filings and thus self-fix the issue from this date forward. My only concern with this option is whether it might raise a flag because I opted for liberal profession originally. I did read somewhere that you are not supposed to earn more than 50% of your income from BIC if you are registered under BNC. I’m not sure how accurate this information is, or if the tax office is generally relaxed about this kind of thing, and have no realistic option but to let it go for the occasional year here or there. I would imagine for example that with COVID particularly, there are hundreds of thousands of people that have been doing all manner of different things (renting out furnished rooms for instance) to bring in extra income temporarily, and many at the exclusion of their normal income. In summary, my instinct tells me this option will go through ok and is the least likely to result in any further correspondence with the tax office or URSAAF, and a possible bureaucratic nightmare.
2. Write a letter explaining the situation
As I’m sending in a paper return I could attach a letter explaining the situation and mistake. I would still be inclined to enter the turnover in box 5TB, to match the URSAAF records, but explain that I should have been entering it as BNC turnover. I suppose this is ‘what you are supposed to do’ in a situation like this, and I imagine that there could be 2 possible outcomes. The person reading the return adjusts it to BNC turnover when entering it into the system, and perhaps adds some kind of note to the file, or they leave it as is which might be simpler for them. Again, it does not affect the tax due from my calculation - zero in either case. But I worry that if they do make an adjustment it could still trigger an exception, possibly leading to a bureaucratic nightmare with them or URSAAF. I don’t know if URSAAF to Impots is a one way flow of information, or if info feeds back to URSAAF. I am exceedingly keen to avoid a bureaucratic nightmare.
As you can probably tell I am leaning towards option 1.
I know you are wary of providing specific tax advice, but any insight or gut-feel you could provide would be appreciated. Also, perhaps there’s a detail or effect that I’ve not considered here.
A related question… What are some examples of entrepreneurial activity that could be classed as BIC services, rather than liberal professions? I’d feel a little better if I can argue that the work I’ve done was possibly BIC not BNC.
Thanks in advance!