By Chas Roy-Chowdhury
Association of Chartered Certified Accountants (ACCA)
Chas Roy-Chowdhury, Association of Chartered Certified Accountants
Don't leave everything to the last minute.
We all say this every April at the start of the new tax year and try to plan for the coming year.
But come January some of us have still not filed our returns.
In a significant change, the filing date of the paper tax returns was brought forward to 31 October 2008.
That applied to income tax (SA100), partnerships (SA800) and trusts (SA900).
The filing date for the electronic returns, fortunately, has not been changed and remains at 31 January 2009.
Let's rewind a few steps here.
The important point which needs to be re-emphasised is that the 31 January deadline, which is a full three months after the paper filing deadline, is categorically for electronic filing only.
But if you have not filed electronically before then you will need a pin code, for which you will need to apply online.
Go through the HM Revenue & Customs (HMRC) website to the self-assessment section to request a pin.
I specifically emphasise this because HMRC will then send the pin to you by post.
Therefore it takes around a week before you will receive it.
Note that there is a slightly different route to follow where you already use another internet based HMRC service, such as child benefits or tax credits.
The e-tax return
Once you receive your pin and have registered, the rest of the process is very similar to completing a paper tax return.
11% of self-assessment taxpayers missed last January's online deadline
Therefore you need to have all your usual details ready, such as
• employment income details ready, as shown on your P60 form
• details of your bank and building society interest
• any self-employment income, and receipts relating to expenses you can deduct from this.
As well as filing your return, you are also obliged to pay the tax you may owe.
If the electronic return had been submitted to HMRC by 30 December 2008, then so long as the amount of tax due was less than £2,000, your tax code would have been adjusted for 2009/10 and the amount conveniently deducted from you salary for that year.
But as that opportunity has passed, even if your tax is below £2,000, you will need to pay any money owing by 31 January 2009.
The two main concerns for consumers are therefore avoiding a penalty for late filing of the tax return and avoiding a penalty for the late payment of the tax itself.
As usual there is an automatic £100 penalty charged by HMRC for late returns.
Interest is then payable on any unpaid tax.
And from 28 February a surcharge of 5% is levied on the amount of unpaid tax left outstanding at that date.
Additionally interest is also charged on the surcharge.
The changes to the self-assessment system this tax year are all part of the efforts by HMRC to encourage taxpayers to file their returns online.
But the earlier paper filing deadline is a double-edged sword.
Whilst encouraging online filing it inadvertently left a number of users facing potential penalties.
These include users who cannot file their tax returns online and those who try but fail to file online.
The Association of Chartered Certified Accountants, together with other professional bodies, have been instrumental in helping those affected by these changes.
The culmination of our efforts is the "reasonable excuse" form, which can be downloaded from the HMRC website, along with guidance notes.
The idea is to send in this form prior to incurring a late filing penalty.
This will allow HMRC to suppress any impending penalty and deems that the return is submitted on time.
Ideally the form will need to be received by 23 January 2009 to guarantee suppression of a penalty notice.
HMRC cannot guarantee the penalty suppression if received after this date.
Another way of avoiding a penalty for late filing is simply to pay the tax owed, as under HMRC procedures the late filing penalty is not imposed if the correct tax is paid on time.
This does assume though that you have calculated your tax bill accurately.
People should be aware that, in the current economic downturn, if they potentially face difficulties in being able to pay the tax, they should make sure that they file their return before 31 January and then contact HMRC.
It now has a Business Payment Support Service which acts as a one-stop shop for those seeking a rescheduling of their tax debt.
Its service, while the name does not suggest it, is available to both individuals and businesses.
While it has always been possible to talk to your tax office and ask for longer to pay your taxes, the new contact point should be more compassionate in their view of your ability to pay.
But you should note that by contacting them you will also be able to stop any surcharges and penalties being applied to the tax you owe - in this case the 5% tax-driven surcharge.
In addition to this, the level of interest charged, at a variable rate, is currently (from 6 January 2009) 4.50% for income tax debts which are rescheduled.
So, the best strategy is to act now and not to let the deadlines pass you by.
It is especially important that you get your tax return in as any opportunity to defer tax payments where you are in financial difficulties flows from that.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.