Early this year, with just five days to go until the deadline of midnight on 31 January, HMRC said that as many as 3 million people still have not filed their tax return. It remains one of the most unpopular jobs of the year and many people understandably put it off for as long as possible.
This reluctance is compounded by the increasing complexity of the rules. With 635 changes to tax legislation in the last five years alone, tax really is taxing for many people, particularly those trying to tackle their tax returns themselves.
HMRC has tough measures in place for those who fail to file a return. For just one day’s delay in submitting their return, taxpayers face a fine of £100. This escalates progressively; if tax remains unpaid or the tax return is not submitted after 12 months, taxpayers will face up to 100% of the tax due. To make matters worse, HMRC has increasing powers to investigate and penalise people for non-submission and non-payment. It is clear that tax returns need to be dealt with, no matter how onerous the task.
We find that not everyone is clear whether they have to prepare and submit a self-assessment tax return. HMRC will not always know to send out reminders or ask you to complete a form, particularly if you have new sources of income. In general, you will need to submit a tax return if you:
• Have been issued with a tax return by HMRC
• Generate self-employed income
• Receive income in excess of the basic rate band
• Receive director’s pay or benefits
• Make a claim for tax relief on pension contributions or other investments
• Are liable for the high income child benefit charge • Receive UK rental income
• Have a capital gain in excess of the annual exemption or proceeds of 4 x this amount
• Receive foreign income
• Do anything else that could give rise to an additional tax liability
The process can be particularly difficult if you have a lot of assets, own more than one property, have international interests, multiple investments or are a business shareholder. If you have sources of income not yet confirmed, it is possible to put in estimated figures and then submit final figures afterwards. This is better than not submitting anything at all.
There is no magic bullet to collecting tax return information. It helps to be organised through the tax year, filing all relevant information as it comes in, rather than having a huge scramble by the end of the tax year. If your circumstances are particularly complicated, it is worth starting to gather all the relevant information well ahead of time.
Our private client tax team are on hand to help you though the process. We will work with you to understand what you need to submit and when. Our specialists cover all types of tax returns for UK and non-UK individuals, trusts, partnerships and companies. We can liaise with HMRC on your behalf as well as with tax advisers in other countries to provide a joined-up service, as well as collating information from various third parties to complete your return.
In the longer-term, we can also review your personal and financial affairs to optimise your tax position in the UK and abroad. In addition, our in-house tax investigation service will help you deal with any HMRC enquiries.
Ultimately, we are here to help whatever your circumstances.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.