Posted by: James Pickford
Questions relating to tax return submission are both regular and varied. The following answer is extensive, but necessary, as there are many areas to cover. If you have any other questions regarding your tax return, contact us via our online enquiry form.
If filing a Tax Return online, it has to be filed by 31st January after 5th April year end. For example, the Return to 05/04/2012 has to be filed online by 31/01/2013.
If a Return is being filed on paper, it has to be filed by 31st October following the 5th April year end. For example, the paper return to 05/04/12 must be filed by 31/10/2012.
If you have a tax underpayment and wish HMRC to collect it via your tax code (if you have PAYE income), it has to be filed by 31st December following 5th April year end, even if it is filed online. For example the return for 05/04/12 showing an underpayment to be collected via your code number has to be filed by 31/12/2012.
Where the notice to file a return was issued after 31 July, (rather than 5th April, which is the standard issue date), the deadline for filing a paper return will be 3 months and 7 days after the date the notice was issued and the deadline for an online return will be the later of 3 months and 7 days after the notice was issued or the 31 January following the tax year end.
If your return isn’t filed by the appropriate deadline, HMRC will charge you a £100 penalty, irrespective of whether you have a tax liability for the year in question.
There are more severe penalties for longer delays:-
3 months late £10 for each following day – up to a 90 day maximum of £900. This is as well as the fixed penalty above.
6 months late £300 or 5% of the tax due, whichever is the higher. This is as well as the penalties above.
12 months late £300 or 5% of the tax due, whichever is the higher.
In serious cases you may be asked to pay up to 100% of the tax due instead. These are as well as the penalties above.
There are also deadlines for paying your tax.
You must pay any tax you owe by 31 January following the end of the tax year.
For example, for the tax year 2011-12 (ending on 5 April 2012) you must pay any tax you owe by 31 January 2013.
The payment deadline is the same for both paper and online returns.
You’ll need to pay one or both of the following:
• any tax you still owe for the previous tax year
• the first of two ‘payments on account’
Payments on account are part payments towards your next tax bill. You don’t always have to pay these – it’ll depend on the amount of tax due and the kind of income you receive.
There is also a deadline for making any further payments on account. For example on 31 July 2012, you’d make your second payment on account for the 2012 -13 tax year. (There is further information regarding when to make payments in “Recurring Questions”)
HMRC will also charge penalties on tax that is paid late, as follows
Length of delay and Penalty you will have to pay:
Thirty days late - 5% of the tax you owe at that date
Six months late - 5% of the tax you owe at that date. This is as well as the 5% above.
Twelve months late - 5% of the tax unpaid at that date. This as well as the two 5% penalties above
The penalties above do not apply to any payments on account that you pay late.
You will also have to pay interest on anything you owe and haven’t paid, including any unpaid penalties, until HMRC receives your payment. At the time of writing, the rate is 3%
Completing a Tax Return is not always a straightforward matter, which is why we ask our clients to let us have their records in good time before 30th September each year.
Although October to January may seem ample time to prepare a set of accounts and a Tax Return, that is not always the case – if it is your first set of accounts, there may be lots of questions that we need to ask:-
• You may not have provided us with enough details regarding expenses claimed
• We may not be able to identify certain expenses you have claimed
• We may need to establish how some of the expenses are utilised in your business
• We may need to ask you about expenses that you have not claimed but may be able to claim
• You may need information from us that will require us to do some research
• We need further information to complete the other sections of your tax return, such as PAYE income, pension contribution details, bank/building society interest details etc.
• We may need to contact a third party for information, for example, your previous accountant if you are new to TWD
• You may need to contact a third party for information, for example a bank/building society.
Apart from the above, the main advantage of letting us have your information early means that we will be able to advise you of your tax liability in good time before the payment date. It will give you more time to provide for your impending tax bill.
On the flip side, if you are due a refund of tax, the earlier the Tax Return is submitted (in theory) the quicker you will get your refund.
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