Get Ahead, Don’t Bury Your Head!
Considering that those filing self assessment tax returns have from the 6th of April after the tax year end until either the 31st of October of that year (to file a paper return) or the 31st of January of the following year (to file their tax return online) it may surprise many, but not all, to know that the busiest day for submitting online returns for tax year 2012-13 was… (drum roll please)…the 31st of January 2014, the day of the deadline! Furthermore, of those 569,847 people who filed their return on this day, 21,027 held out until between 11pm – midnight….nothing quite like leaving it ’til the last minute!
The 31st of January is also the due date for any self assessment tax due, which may result in a cash flow predicament concerning any unexpected tax liabilities for those finalising their returns on the due date. This problem could be avoided by filing the return in good time, and in addition, HMRC will discuss payment plans with taxpayers if they call in advance of the tax becoming due and if the return has been submitted.
Good preparation and organisation can also benefit those tax payers who make payments on account in January and July: for those who finalise their tax returns before the July payment is due and have a reduced tax liability in comparison with the prior year, in some circumstances it may be possible to reduce the July payment on account.
It is also important to bear in mind that there is a strict penalty regime in place for those who do not submit their return on time: An automatic £100 penalty once the return is late, which applies regardless of whether you have a tax liability, or have paid your tax. Further to the £100, there are daily penalties of £10 per day once the return is three months late (up to a maximum of £900).
If six months late there is an additional charge of £300 or 5% of the tax due, whichever is higher, and for returns that are 12 months late there is another penalty of £300 or 5% of the tax due, whichever is higher. In serious cases you may be asked to pay up to 100% of the tax due instead, and in some cases the penalties can be even higher than this.
Those who find tax affairs burdensome and daunting will often do an ostrich impression and ignore impending deadlines and penalty notices, however it is always best to meet deadlines head on and know your tax liabilities in advance of their due date.
If you feel that you do not have the resources to prepare your tax return then always remember that you can seek professional help – for more information please contact Green & Co.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.