SELF ASSESSMENT TAX RETURNS AND 31 JANUARY DEADLINE

Tax Archive 07/01/2008

There are less than four weeks to go until the filing deadline for self assessment tax returns. If you have not already filed your return then what should you be doing now to ensure you meet the deadline and avoid incurring penalties?

What are the penalties?

There is a penalty of £100 if your income tax return is filed after the deadline of 31 January 2008 (for 2006/07 tax returns). If a partnership return is filed late then there is a penalty of £100 for each partner in the partnership.

If payment of your tax liability for 2006/07 is not received by HM Revenue & Customs (HMRC) by 31 January 2008 then interest will start to accrue from this date. The current rate of interest on overdue income tax is 8.5% per annum. Any outstanding liability at 28 February will also incur a surcharge amounting to 5% of the unpaid tax.

How can you file your return with HMRC and pay your tax liability?

You can either send in your paper return to an HMRC office or you can file your return online. If you are sending your return by post then you should allow enough time for this to reach the HMRC office as the late filing penalty will automatically apply if your return is received after 31 January.

You can pay your tax liability at your bank or post office, by post to the HMRC accounts office at Shipley or online via the HMRC website at http://www.hmrc.gov.uk/. If you are paying online you will need to pay by debit card and will need your unique taxpayer reference number shown on your payslip (10 digits plus the letter K).

What are the benefits of filing online?

HMRC has said that online filing provides taxpayers with the following benefits:

• the tax calculation is automatic;
• you get an immediate acknowledgement;
• if you are owed money, you will get a faster repayment;
• you can view your liability and payments in an online statement of account and receive reminders by secure email or text messages;
• your return can be completed in stages, as it can be saved for up to 30 days; and
• it is available day or night, so you can use it whenever it is convenient for you.

Despite concern in the past about the robustness of the HMRC website, last year there was a marked improvement in the service with many million filing online successfully. Note that if you are filing a paper return then you will need to calculate the tax due yourself (if this is after 30 September), whereas HMRC will automatically calculate the tax due for returns that are filed online.

How can you register for online filing?

Before you can file online you will need to register through HMRC's website and receive your individual pin number. The pin number can take up to seven days to arrive, therefore if you wish to file your 2006/07 return online you will need to register as soon as possible. HMRC recommends registering by 22 January 2008.

HMRC has produced a podcast demonstrating how to register and file online. This is available to view or download from HMRC's website at http://www.hmrc.gov.uk/podcasts

Francesca Lagerberg, Head of the National Tax Office at Grant Thornton says: "If your tax affairs are relatively simple, then you may choose to file online using HMRC's free software. However, this software only covers the main tax return pages together with the Employment, Self Employment, Individual Partnership and Land & Property supplementary pages. If you require any other supplementary pages, including the capital gains tax pages, for example, then you will require third party software to file online. Some third party providers do not charge for their software, but others do. Therefore, the more complicated your affairs, the more cost effective it may be to employ an agent to prepare and submit your return."

"If you have not filed your tax return yet, do make it a belated New Year's resolution to complete the form and get it in on time to avoid any unnecessary penalties and interest charges.".

Grant Thornton UK LLP will be happy to help with anyone needing assistance. Please click here to contact us for further information.