At this time of year, we are all preoccupied with Christmas and the festivities. But small business owners and tax payers shouldn’t overlook their requirement to file a tax return.
HM Revenue & Customs estimate around 11 million people are required to submit a 2013/14 tax return. Taxpayers will need to file their returns electronically by 31st January 2015 in order to avoid being issued with an automatic filing penalty. The 31st January also marks the date by which your outstanding tax must be paid.
In this article, we take a closer look at the self assessment filing deadlines and raise some important issues that tax payers should be aware of.
It takes some time to get registered with HMRC; both in terms of informing them that you need a tax return (because you’re newly self-employed for example) and also to obtain online access to HMRC’s website to file your return electronically. So it’s really important that you factor in some processing time. And remember, contrary to popular belief, HMRC will not necessarily send you a tax return to complete- it is your responsibility to register for Self Assessment if necessary.
Fact or fiction? "Filing your tax return early, means you must also pay your tax early".
Fiction! Any balance on your 2013/14 account must be paid on-or-before 31st January 2015. It is irrelevant if you file your return earlier
The more time you leave yourself to prepare your return; the better. This should reduce the risk of errors and mistakes being made, which could not only be costly, but could also mean that you end up having to re-do your return.
Last year, the busiest day for online returns was 31st January 2014, when HMRC received 569,847. The busiest hour occurred between 4pm and 5pm, when 45,706 returns – more than 12 per second – were received by HMRC. And 21,027 people left it until the eleventh hour, and filed their online return between 11pm and midnight on deadline day.
So don’t leave your return until the final day, as HMRC’s website and call centres will be under tremendous pressure.
Up until a few years ago, an automatic penalty of £100 would be issued for a late tax return and this could be reduced if you paid your tax by the due date or the tax liability was less than £100.
However, the penalty regime was completely overhauled and a late tax return is currently subject to the following penalty regime:
Each of these penalties is in addition to one another, so a return filed a year late could face penalties of at least £1,600- and this could escalate depending on the level of tax due.
Penalties are a waste of your hard-earned cash and you do not get tax relief for them either. Even if you can’t afford your tax bill, it may be advisable to file your return on time to avoid those nasty late filing penalties.
Please be aware that the penalties described above, are only for the late filing of a Self Assessment tax return. There are additional penalties for the late registration with HMRC and late payment of tax- the latter of which also incurs interest.
HMRC’s online filing system for tax returns calculates your tax liability for you. But needless to say, it will not check whether your figures are accurate or that you have claimed your full entitlement to expenses, reliefs and allowances.
But Mcalistair would be happy to take care of all your tax affairs for you; from registration with HMRC, to completion of the return, to calculation of your tax liability and the due dates.
So don’t get the New Year off to a bad start by filing your tax return late and facing a late filing penalty.