Insights

It's that time of year again - the date for filing your self assessment tax returns - and of course, paying any tax liability.

Most individuals who are required to fill out their own returns should now be aware of the new(ish) deadlines introduced by HMRC three years ago, but in case you've been living on another planet recently, or perhaps have relied completely on your accountant to complete your tax returns, the time has come to take action or you may face an unpleasant fine.

There are two separate deadlines for the tax return; one for the paper return and one for the electronic filing.

Paper filing

For paper filing for the tax year that ended on 5 April 2011 (the 2010-11 financial year), the deadline is 31 October 2011 - days away. If you send a paper tax return it must reach HMRC by midnight on 31 October. You only have longer than this if you received notification after 31 July that you must file a return. In this case you'll have three months from the date you received that notification.

HMRC will be sending out reminder letters to those who usually file on paper but have not done so by 31 October. It is therefore critical that if you have filed a paper return and you receive one of these letters you contact HMRC immediately. Also, if you have not received your tax calculation by mid-January, then you should check with HMRC whether they do have your tax return, as all calculations are guaranteed by the end of January if you have filed your paper tax return on time.

Electronic filing

If you have missed the 31 October paper-filing deadline, then you can only file electronically; there is no paper alternative.

Electronic filing was introduced to encourage people away from paper filing. It saves man-hours and costs less for the Revenue if the figures which have been input by taxpayers are electronically submitted into their records, rather than having to be manually entered.

You can only start the online filing process if you have a Pin code. HMRC sent out Pin codes to many taxpayers a few years ago and you may well have kept yours; if you have filed online in previous years you will already have a Pin; if you are new to self-assessment, or have forgotten your Pin, you need to register on the HMRC website.

Your online self assessment return must reach HMRC by midnight on 31 January. Again, you only have longer than this if you received notification that you must file a return after 31 October. In this case you'll have three months from the date you received that notification.

Do bear in mind that there is an earlier deadline of 30 December if you want HMRC to collect any tax due through your PAYE (Pay As You Earn) tax code. You can only ask for this treatment if you owe less than £2,000.

Penalties

Here's the thing. If you don't get your paper return in on time and you fail to subsequently file it online by the 31st January, you will face a penalty. If your return is even one day late you will have an automatic fine of £100. This applies even if you have no tax liability at all. If the return is 3 months late, you'll be charged £10 for each following day up to a maximum of £900; if it's six months late you will pay an additional £300 or 5% of the tax due, whichever is the higher; and if it’s 12 months late, a further £300 or 5%, whichever is higher. In some cases, HMRC can charge you 100% of the tax due.

Excuses

Although it might not feel like it at times, HMRC does have a heart. You won't incur a penalty if you have a reasonable excuse for missing a deadline. If your documents have been lost through fire or theft, if you've had a life threatening illness or suffered a bereavement of a partner, if there's been a postal strike or HMRC's own online system has crashed - these may all be reasonable excuses. Notwithstanding the delay though, you still have an obligation to send the return in as soon as possible once the immediate problem ends.

Extra time

If you think you cannot pay your tax liability, all is not lost. HMRC set up the business payment support service available to businesses and individuals, which means you may, if considered viable, defer your tax payments and escape the tax penalty charges. (http://www.hmrc.gov.uk/payinghmrc/problems/bpps.htm)

For support completing your own self assessment tax return, please contact Paul Webb, pw@rjp.co.uk.