As we approach the winter period, many clients report increasingly busy trading environments as so many sectors gear up for the festive season and make preparations for holiday closures and heavy demand during the next few weeks.
While there are often many priorities over the coming months, we would like to remind any taxpayer who submits a self-employment tax return (for any tax liabilities) that the filing – and tax payment – deadline of 31st January is right around the corner!
Sharing your documentation, paperwork, income records, and calculations with your accounting team now is highly advisable, ensuring we have sufficient scope to complete all the appropriate work, raise any queries as necessary, and submit your declarations to the tax office well before the cut-off period.
Issues Related to Late Tax Filings
HMRC has taken a tougher stance on a number of tax matters in recent years, and late tax returns or late payments are no exception. As a summary, if your tax return is late, irrespective of the value of tax payable, if at all, missing the tax office deadlines can result in:
An automatic £100 cash fine for a return that is one day late.
Additional charges of £10 per day for up to 90 days within three months of the due date – a maximum penalty of £900.
Another 5% of the tax obligation owing, or £300 as a fixed fine, if your return remains overdue at six months.
Returns that are a year late attract an additional 5% tax penalty or a further £300 fine, whichever is greater.
Note that in some scenarios and depending on the communications you or your accountant have had with the tax authority to explain the circumstances behind a late filing, you may incur a late submission penalty as great as 100% of the tax owing – effectively doubling your tax charges for the year.
In addition to charges and fines for tax returns that do not meet the deadlines, HMRC will charge a separate and consecutive series of interest charges against the late tax payable. This system works by initially levying a 5% charge based on the tax owed, increasing by 5% of the tax debt at six and 12 months.
While it is possible to appeal an automatic £100 late filing fee, these are unlikely to be waived unless you have considerable proof of intent to file. Only in unforeseeable circumstances, such as an internet or electrical outage part-way through the submission, will HMRC be inclined to approve an appeal.
Gathering the Relevant Documents to Assist With Prompt Tax Computations
If you have yet to provide us with your documentation, the following checklist may be a useful reference. Delays are commonly caused by missing paperwork or figures, and with a backlog of tax accounts to manage due to a flurry of late submissions as the deadline approaches, we encourage all clients to work through their files to ensure all the relevant details are included.
Depending on whether you have earned property, dividend, employment, self-employment, interest, pension or benefits in kind income during the tax year, we will need:
Copies of your P11D, payslips, dividend vouchers and a statement showing all rental income received, alongside rental property expenditures.
Details of business outgoings, including costs linked to running a professional or self-employed business and mortgage interest and premise costs where applicable.
Information about private pension contributions made to ensure any tax relief available is properly claimed.
Schedules of interest earnings, including interest on savings, investments and long-term products – although ISAs are excluded.
The specifics of all other income or gains, including chargeable gains resulting from the sales of shares, properties or other assets.
To verify the figures provided, we will often request copies of loan statements, bank statements, finance agreements, business credit cards and loans, sales revenues, expense receipts, payroll records and inventory valuations – although not all of these pieces of information will apply to every tax return.
Submitting this information now, with just under three months remaining to file your finalised tax return information, ensures we have plenty of time to let you know if any details or documents are missing, advise on variable tax treatments to ensure you make informed choices, and confirm your final tax liability far before the payment date falls due.
Should you need any assistance with your tax affairs, please get in touch with the SAS Accounting team at any time.