Tax Return deadline – leaving it to the last minute could be costly!

The advent calendars are being opened, the build up to Christmas has well and truly begun, but with taxpayers focused on the festivities how many, I wonder, are pushing thoughts of their tax affairs to the back of their minds?

You may think there is plenty of time in January to get your Tax Return submitted but leaving it to last minute can be costly.

The deadline for submitting a paper return passed on 31 October, so the only option now is to submit online. Therefore if you haven’t already filed your 2014/2015 return you need to file it online by 31 January 2016. Although it may seem like there is plenty of time left, I know all too well how quickly Christmas is sneaking up on us and I fear the 31 January deadline will do the same.

Those taxpayers who are submitting their first online Tax Return will need to firstly register for HMRC online services. Doing so involves getting an ‘activation code’ from HM Revenue and Customs (HMRC) which needs to be posted and can therefore cause delays. HMRC do say that for first time tax return filers the deadline is unofficially 21t January not the 31st; those leaving it any later are unlikely to be able to submit on time.

So what happens then?

Well, long gone are the days when penalties were only due if there was tax unpaid. Now, if a return is submitted after the deadline, an automatic £100 penalty is imposed. If the return still isn’t filed by three months after the due date, daily penalties kick in, with further penalties due after six months and 12 months. This means that you could owe up to £1,600 in penalties even if no tax is due!

Taxpayers may feel they can avoid the brutal penalty system by offering HMRC a ‘reasonable excuse’ however, what HMRC consider to be a ‘reasonable excuse’ and what the taxpayer claims is a ‘reasonable excuse’ often varies greatly. Short of there being a fire, a death, an unexpected hospital stay, software failure or problems with HMRC services, your excuse is unlikely to be accepted as ‘reasonable’.

HMRC state that people can have a genuine excuse for missing a tax deadline but owning a pet with a taste for HMRC envelopes, for example, isn’t one of them!

Once the return is submitted the enquiry window opens, whereby HMRC have the right to enquire into any aspect of the Return.

Such enquiries can be costly with professional fees mounting up, one way to minimise the cost would be to sign up for Armstrong Watson’s fee protection cover. Our Tax investigation service is provided for a small annual fee and covers you against the professional fees involved in dealing with an enquiry in to your Return, providing peace of mind.

So whilst Christmas is indeed approaching I would urge all taxpayers who have not yet filed their returns to remind themselves that the deadline for doing so is also approaching. The task inevitably takes longer to complete than anticipated so don’t put it off until after the festive cheer.