Christmas how to prepare2012 and the events of new year’s eve have now been taken over by the resolutions for 2013. Already many have been made and broken only days into the new year. One resolution that you cannot afford to break, if you are one of the nine million who complete a self assessment tax return, is to submit it to HM Revenue & Customs by 31st January.
For some readers this is an annual event in their social calendar. Despite the popularity of that date many overlook the other two requirements to be fulfilled on 31st January.
Firstly, if there is any outstanding tax due for 2011-12, this must be paid by 31st January 2013. Secondly, if your total tax bill for 2011-12 was over £1,000, after any PAYE or other deductions at source, a payment on account is due and payable by 31st January. However, if in 2011-12, 80 per cent or more of your tax was deducted at source, no payment on account will be due.
HMRC will levy a penalty for all tax returns submitted late irrespective of whether there was tax liability due and payable. The penalties are cumulative based upon the period of lateness. The penalties begin at a fixed rate of £100 but can hit 100% of the tax due plus a daily rate of £10.
There are several steps that you can take even at this late stage to avoid the payment of penalties.
Start the process from today. Assemble all your income and taxable expenses records for the year ended 5th April 2012. Classify them into their relevant income sources, such as employment, self-employment or rental.
If you are not registered with HMRC for electronic online filing it may be too late to submit an application as the process may extend beyond the deadline date. If this is the case you will need to engage help from an accountant or tax adviser.
If this is not your first time, use last year’s tax return as a point of reference for the static data and a reminder of the sections that you need to complete. Don’t forget that some things may change. You may have had additional income to add to the current tax return.
Avoid leaving blanks on your tax return. Blank boxes or omitted data may provide HMRC inspectors with a desire to take a closer look into your affairs. If you don’t have the actual figures, provide a reasonable estimate and state that in the area provided. Don’t forget to provide the actual figure to HMRC as soon as possible thereafter.
Do not ever make deliberately or wrongful disclosures. The reward is now a penalty that can hit 100% of the undeclared tax liability. Depending on the size of non-declaration, HMRC also promises to give you personal attention for the next five years.
Always double-check the details on your tax return before submission. Minor errors such as your name, address, date of birth, signature and absence of date on tax returns are responsible for HMRC rejecting a large proportion of tax returns at the first hurdle.
Always keep detailed notes of all your entries on your tax return plus a copy of the original that you have sent off to HMRC. In 18 months’ time, it may be difficult to explain one or more entries on your tax return to HMRC.
Happy 2013
David Frederick FCCA
Marcus Bishop Associates
Chartered Certified Accountants
