The time to tinker has passed by Paul Gough

Self Assessment Tax Returns

George Osborne’s Budget announced his five year plans to phase out Self Assessment Tax Returns for individuals and replace them with a single digital tax account. Sounds like simplification at its best! I am delighted that the Chancellor is content to expect taxpayers to embrace responsibility for a role currently performed by professional advisers.

To desire the accurate collation of information about income and allowances applicable to individuals in a central, secure, digital account is not without merit. But is it realistic? Are we more likely to get this from HMRC or the tooth fairy assisted by the Easter bunny?

I delight in the thought of banks and investment houses automatically disclosing interest and dividend income from an ‘electronic tax voucher’ linked to the digital tax account of taxpayers. I can even imagine a time when employers accurately return earnings figures (under RTI style reporting), into a system under the control of HMRC that is ready in time to meet the reporting dates and successfully ‘does what it says on the tin’.

In the unlikely future event that workers are allowed to claim tax relief on any expenses they incur in travelling to or from a place of work, or in the performance of their duty, then I’m sure that it’s possible this suite of simplifications can be combined in an unambiguous easy to use, infallible Government system. It would be a new system without uncertainty; a system of clarity and precision; one that is equitable to all and truly does ‘level the playing field’. But is this probable?

Am I merely being a Luddite with no ability to clearly see the future? Looking back over the last few years I can see a host of employment status related legislation that does not fill me with confidence. Failed attempts at simplification which make me think that whatever the Chancellor dreams of, tax advisers will continue to be very busy as they help prepare and submit personal tax information for others.

Tell the office no holidays …… I suspect the same is true for HMRC.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Do you need to file a tax return?

Do you need to file a tax return?

Each year HMRC send a Notice to Complete a tax return to anyone they think requires one, but be careful because it still remains your responsibility to inform them if you need one, and you’ll still get a penalty if you fail to complete one when necessary.  These days penalties will apply even if the tax due is zero.

The most common reasons you’ll need to complete a return are:

  • You are self-employed.
  • You’re a partner in a partnership.  The Partnership itself will have to file a return too.
  • You’re a company director.
  • You have annual income of £100,000 or more.
  • You have annual income of £50,000 or more, and you or your Partner was in receipt of child benefit.
  • You have rental income.
  • You need to claim expenses or reliefs, or you’re a Trustee.
  • You have Capital Gain’s Tax to pay.
  • You have £10,000 or more in dividend or other investment income.

 

Technically, the last has no basis in the actual legislation; it’s simply HMRC adding on another category of people that they want a return from!  That being said, if it’s a simple return then there’s no harm in filing one anyway, and it prevents any arguments at a later date.

If HMRC send you a return to complete but none of the apply to you then just give them a call on the Self Assessment Helpline.  You may find that it’s an error, and that you don’t need one after all.

If you think you need a tax return for the 2013/14 tax year, which ended on 5th April 2014, then you have until the 5th October 2014 to tell HMRC.  If you don’t there could be penalties.

Your contractor accountant can of course help, so if you’re not sure you can always give them a call.

Intouch Accounting currently offer the completion of a personal self-assessment tax returns for one employee as part of our comprehensive contractor monthly service please call us to find out more.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

The cost of late tax payments and late filing a self assessment tax return

The cost of late tax payments and late filing a Self Assessment Tax Return

Many contractors will be relieved that they have filed their 2011-12 Self-Assessment Tax Returns before the final deadline date of 31 January 2013. Others may be in the position of not having filed their return within this time and they will incur penalties from HMRC as a result.

It’s important to note that the deadline date is not only the deadline for actually filing the tax return, it’s also the date to pay any tax for the previous year along with your first payment on account for the next tax year.  Penalties apply to both late filing and late payment so you could potentially end up with an additional bill if you’ve filed but still not paid.

 

Penalties for late payment of tax due

If the deadline for paying tax due is missed, interest will be charged daily from the due date of 31 January 2013. The interest rate charged is variable; the latest figures appear on the HMRC website.

If the tax remains unpaid by 28 February 2013 a 5% surcharge will also be applied to your bill.

If any tax still remains unpaid by 31 July 2013 a further 5% surcharge will added to the outstanding amount.

 

Penalties for late filing of a tax return

Missing the deadline date for filing a paper or online tax return for 2011-12 will incur the following penalties from HMRC

  • An automatic penalty of £100 is applied to all returns filed after the deadline date, even if no tax is actually due.
  • If the return is filed three months late a penalty of £10 a day will be applied. This is payable up to a maximum of 90 days. This amount will be owed in addition to the £100 automatic penalty described above.
  • If the return is filed six months late, the penalty will be the higher of:  5% of the total tax owed or £300.  This will be payable on top of all of the penalties described above

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.