Sarah Bradford focuses on the deadlines for filing tax returns and paying tax, and the penalties that may befall the unwary.
The start of the new year brings with it an impending deadline as far as personal tax returns are concerned. Self-assessment returns for the 2012/13 tax year must be filed online by midnight on 31 January to avoid a late filing penalty. Any tax due for 2012/13, plus the first payment on account for 2013/14, must also be paid.
If you owe tax of less than £3,000 that you would prefer to have collected via an adjustment to your PAYE code, you will need to have filed your tax return a month earlier, by 30 December. It is already too late to file a paper return. The deadline for paper returns was 31 October. Filing a paper return after that date will trigger a late filing penalty, but if you file online by 31 January instead this can be avoided.
Interest and penalties
It is important that the 31 January deadline for both filing returns and paying any tax due is met. If the return is filed late, you will be charged a penalty of £100, even if the return is only a day late and regardless of whether you have any tax to pay. Further penalties start to accrue if the return is more than three months late. A penalty of £10 per day is charged in addition to the initial £100 penalty for each day that the return remains outstanding after the three-month point is reached, up to a maximum of £900. Further penalties set at the higher of £300 or 5% of the tax due applies at the 6-month and 12-month points.
In addition, interest and penalties apply if tax owing is paid late. Interest is levied on unpaid tax from the due date and also on any unpaid penalties. Penalties are charged if tax is not paid within 30 days of the due date. A penalty of 5% of the tax owing at that date is charged at the 30-day, six-month and 12-month points.
It is possible to appeal against penalties imposed for the late filing of tax returns if you think that you have a reasonable excuse for your return being late. However, HMRC take a harsh line on this and circumstances generally need to be quite severe such as a death or major illness for HMRC to accept that there is a reasonable excuse as to why the return is late.
Be prepared!
Filing tax returns late and failing to pay tax on time can become an expensive business. It is important therefore to ensure that you allow sufficient time to file the return. If this is the first year that you need to file a return you will need to ensure that you register for self-assessment online in good time – certainly no later than the middle of January to allow time to activate the service. Many people leave their tax return to the last minute, which means that the service becomes very busy at the end of January. To avoid filing mishaps and system crashes, it is advisable to do it sooner rather than later.
It is important that the return is correct as well as being filed on time, as further penalties may accrue if there are inaccuracies in the return.
Practical Tip:
Make sure that you have everything in place and are registered for self-assessment online to ensure that the 31 January tax return deadline is met.
