The 31st January deadline to submit your self-assessment tax return for the year ended 5 April 2017 has come and gone.
With HMRC reporting just a week before the deadline that over 3 million people had still not filed their returns (just under one third of the people in self-assessment), there will be plenty of people who have not yet submitted their forms.
For those people, Paul Haywood-Schiefer, Personal Tax Assistant Manager at accountancy, tax and advisory practice Blick Rothenberg, explains the position.
If you have missed the deadline, unless you have a reasonable excuse or had only registered to complete a return in the last three months, HMRC will be issuing you with a £100 late filing penalty, on top of any tax you owe. In addition to that, you have just extended HMRC’s enquiry window.
Usually HMRC have 12 months from the date of submission to enquire into your tax return. However, where the return is submitted late, this is extended to the next “quarter day” which will be the 30 April, 31 July, 31 October or 31 January, depending on when you submit the form.
Paul advises that continued failure to file has further consequences. It is really important not to bury your head in the sand about this.
You might feel a bit more relaxed because the deadline has passed, but it is really important to get your return completed and submitted as soon as possible. HMRC will chase you for it, but if the return has still not been filed by 1 May, HMRC will begin to issue £10 daily penalties for the next 90 days.
Continued failure to file after 6 months and 12 months will lead to further penalties of 5 per cent of the tax liability or £300 (if greater). Don’t let it get this late, because after 12 months, much harsher tax based penalties can arise.
In addition to failure to submit the return, there is also the tax due to consider, as Paul explains. It’s one thing that you have not completed your tax return, and it may be that you are still trying to get a few last pieces of information together, but if you know you are going to have a liability it is worth making an estimated payment to HMRC in advance. The reason for this is that interest will accrue daily on the balance of any tax due until payment is made to clear it. If you pay too much, you can claim the difference back from HMRC once you’ve submitted the tax return and regularised the position.
Interest is not the only amount charged on outstanding tax to HMRC, as Paul continues. If the tax liability for the year to 5 April 2017 is not cleared by 2 March 2018, HMRC will apply an additional 5 per cent surcharge. You may not have calculated the tax by then if you still haven’t submitted the tax return, but once you do, HMRC will calculate the surcharge and apply it. This is another reason to make an upfront payment while you are finalising the return.
For those people who may not be able to pay the tax, there is help at hand, as Paul advises. For those people that genuinely cannot afford to pay their tax bill in one go, HMRC can offer something called time to pay arrangements.
If HMRC accepts the circumstances of an individual (you will be expected to provide a detailed breakdown of incomings, outgoings and assets) are such that they meet their criteria, they will then arrange a payment schedule with the individual to pay off the tax owing over the course of a few months.
This is without incurring any further penalties other than having interest accrue on the outstanding tax. However, for a time to pay request to be considered you must have submitted your tax return so that the tax can be calculated. Therefore, don’t delay in getting that return completed and filed as soon as possible.