Tax self assessment - Have you completed yours?

With the Christmas decorations now firmly stored away and thoughts of the year ahead occupying our minds, January can mean only one thing if you work in Tax; Self-Assessment deadline! If you haven’t yet submitted your 2015/16 Tax Return the clock is ticking and leaving it to last minute can be costly.

The deadline for submitting a paper return passed on 31 October 2016, so the only option now is to submit online. Therefore if you haven’t already done so you need to file your return online by 31 January 2017.

There isn’t a great deal of time left and 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 of £10 per day kick in, up to a maximum of £900. Further penalties are 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 many New Year’s resolutions fail, the best resolution to keep would be to ensure your future tax affairs are up to date and submitted in a timely manner avoiding any last minute stress.