With the end of October a few short weeks away, HMRC have issued a warning to all those intending to complete paper tax returns in respect of the 2010/2011 tax year. Essentially the warning can be broken down into three parts:
- The deadline for receipt of paper tax returns is midnight on Monday 31 October and any late returns will result in a fine of £100 with further fines after 3, 6 and 12 months.
- The fine applies even if there is no tax to pay or you pay any due tax on time.
- If you send in a paper return late and then follow it up by filing a further copy online, the fine will still be applied.
HMRC have sent out just over 10 million Self Assessment returns/ notices for the 2010/11 tax year and are getting tough on those who fail to complete their returns on time. This brings a simple choice. Either the paper return is completed and sent in for receipt by the end of October or the return is filed on line by 31 January. Either way there is little time left to start preparing for the return to be completed.
HMRC are keen to persuade as many people as possible to file returns online and apart from the extra 3 months completion time they say that those completing on line receive the benefit of:
- Automatic calculation of tax
- Acknowledgement of receipt
- Faster processing of any overpayments
Whilst the extra three months alone is enough to persuade many to file online the timescale is not as generous as at first may seem given the break for Christmas holidays and the need to pre-register well in advance. Although many self assessment tax returns are relatively straightforward, it is worth handing your return over to an accountant if there are any apparent complications. Not only is an accountant skilled in submitting tax returns, they may be able to point out potential tax savings. So, if you run a business, work from home, have overseas income or even have more than one income source it is often worth consulting an accountant.
Whether you intend to submit a paper return or file on line this is the time to get the paperwork together. As a minimum you will need business accounts or employment records, bank statements, investment transaction and income reports and if working from home you will also need household expenditure such as power, rates and so on. The sooner that you prepare the files and send them to your accountant the better.
It is also worth starting a proper filing system for those records which will be required for future tax returns. One outcome of the recent HMRC business records check exercise is that some inspectors now expect records to be in good order during the tax year. This is a change from the previous attitude which accepted that a “shoebox of receipts” was adequate during a tax year as long as the records were correctly compiled at the end of the year.
Finally, one way to minimise this annual tax return panic is to hand over your day to day accounting or bookkeeping to your accountant. For example, the Solid Limited accounting service will take care of all your day to day book keeping requirements as well as keep on top of cash flow forecasts, management reports and end of year submissions.