By Chas Roy-Chowdhury
Association of Chartered and Certified Accountants
There are less than two weeks to hit the deadline
The next tax self-assessment deadline is almost here - 31 January 2010.
With Christmas and the New Year festivities over, it is that time of year again when the final deadline for filing tax returns, and also paying any tax you owe, looms.
This is the second year when we have had new filing deadlines.
So it is worth re-emphasising what they are, and how the self-assessment deadlines are twin track, with one for the tax return and another for the tax payments.
Electronic tax return
There are in fact two separate deadlines for the tax return: one for the paper return and the other for the electronic filing.
For paper filing for the tax year ended 5 April 2009, known as 2008-09, the deadline was 31 October 2009.
That was only the second year in which there had been an October deadline.
But if you missed that relatively new paper filing deadline then you can now only file electronically.
Whether we feel comfortable about it or not, more and more of what we do is becoming electronic.
In this particular case there were two reasons why a later deadline of 31 January for electronic filing was set.
It was Lord Carter who suggested it, with the aim of encouraging people to switch away from paper filing.
His first reason was that with paper filing, HM Revenue and Customs (HMRC) had to deploy its employees to input the tax return information into their computer systems.
This was a burden they wished to see reduced during a time of staff reductions in the organisation.
The second reason was that HMRC wished to receive clean data: clearly, tax information inputted by staff was susceptible to human error.
What to do
You can only start the process by having a Pin code to get into HMRC's online system.
Where you have filed online in previous years you will already have a Pin, hence you can get started straight away.
HMRC started sending out Pin codes to many taxpayers a few years ago and you may well be one of those organised people who has kept it.
Otherwise you will need to go to
the HMRC website
It is a fairly straightforward process but you need to be aware that the Pin code will be sent to you by post.
HMRC advise that you should allow seven days for this to arrive.
Therefore please do not delay - get your skates on and register today.
Let us now turn to the tax return preparation itself.
The whole process is actually quite similar to that of completing the paper return.
First off, set aside some time to devote to the return.
There is nothing worse than starting and then being disturbed and having to go and do something else.
But before you start working on your tax return, have all your usual source material at the ready.
This will include:
• your P60 form - you must enter the precise figure for your income and not just a rounded approximation
• specific details of self-employment income, together with receipts and invoices for items you consider deductible from this income
• all bank and building society interest details
• details of any dividends.
At this stage you will need also to pay any tax you owe.
Under the twin track deadlines I mentioned earlier, 31 January is also a payment deadline.
If the electronic tax return had been filed by 30 December 2009, and if the tax due was below £2,000, then HMRC would have taken payment for the tax owed, month by month, from your income during the next tax year 2010-11, by adjusting your PAYE coding.
But as we are looking at filing the return in January, the full and final tax payment will need to accompany the tax return.
If you have been within self-assessment for a number of years and usually owe tax of over £2,000 then you are likely to be within the payments regime.
This means that you will make a payment on account within the tax year on 31 January.
So, for the tax year 2008-09, a payment on account was required on 31 January 2009.
A second payment on account was then required on 31 July 2009.
And you will now be required to pay the final amount on 31 January 2010, together with the payment on account for the subsequent tax year 2009-10.
One last point on this.
Please note that the HMRC bank account details have changed from last year.
Therefore go to the self-assessment part of the HMRC website to double check if you are unsure.
As the tax return and the tax payment follow their own requirements then so too does the late penalties regime.
A late tax return penalty is £100.
This is automatic and is issued by an automated process by the HMRC computer.
A penalty for the late payment of the tax will apply from 28 February and is 5% of the tax unpaid.
However interest will also be payable on non-payments or under payments of tax from 1 February and will also payable on the penalty too. The rate currently applying is 3%.
If for any reason you are unable to file your tax return on line by the 31 January then you may still have the chance to claim reasonable excuse and have HMRC extinguish the £100 penalty.
There is a dedicated form which enables you to put forward your reasonable excuse and it is available from the
What if you received the paper tax return, but have not got around to sending it in, and you have not contacted the banks, building societies and others who need to provide you with information to complete your tax return?
You should press on now and register for online filing anyway, as mentioned above.
Even if you are late filing and do incur the £100 penalty you must work towards getting your tax return in as soon as possible.
Otherwise HMRC will pursue you for it and you could end up paying much higher penalties in the long term.
The message is simple - burying your head in the sand will not work.
If you are under self-assessment and think you may not be able to pay your tax liability then you must take note that help is at hand.
At the end of 2008, HMRC were instructed by the government to set up the business payment support service.
The service is available to both
One telephone call to the support service should allow you to defer paying your tax liability on the due date.
However, you need to be considered viable.
That is, you are not likely to fold up and HMRC can be confident that they will receive their tax in due course.
By having your tax payments deferred by the payment support service you will escape the imposition of the 5% tax penalty surcharge.
But in order for you to take advantage of this help your tax return needs to be filed.
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