Ross McConnell - Kinross Based Chartered Accountant

Don't Let HMRC Have The Last Laugh On Self Assessment

by ROSS MCCONNELL on MARCH 25, 2019

This year, self assessment tax returns were due to be completed by nearly 12 million people in the UK. Primarily, this represents the self-employed, a sector that is growing year by year, but it also includes those with more than one source of income. Every January a national advertising campaign is run to remind this group to submit their form before the deadline for the preceding tax year – which is 31 January for online returns (and 30 October for hard copy returns). But every year some don’t file on time, and January 2019 was no different. In fact this year, HMRC said they had received 9.2 million returns in time, but that means one in ten of those affected were late.

This situation reminded me of a letter I originally saw, many years ago now, in Viz magazine. It went along the lines…

“I was delighted when the kind people at the Inland Revenue wrote to me recently, telling me that my tax return was ‘outstanding’, particularly since I can’t even remember sending it in.”

Sadly however, the late-paying taxpayer will find the joke is actually on them.

Unless you have a reasonable excuse (and HMRC aren’t famed for accepting excuses), Tax Returns submitted after 31st January incur an immediate penalty of £100, and your total tax bill will also begin to attract interest. Initially it is added at 3%, but if you hadn’t paid by 28 February 2019 then the interest added immediately rose to 5%.

There’s less to laugh at when that bill is presented.

In previous years, HMRC would issue penalty notices to those affected (those who had failed to submit their hard copy assessment) by the end of October 2018 – or their online return before the end of January.

But this year, thanks to increased man hours devoted to dealing with Brexit questions, the penalty notices weren’t issued at the usual time. That meant more taxpayers were left with a bigger bill to pay, after the interest they’ve incurred is added to the main amount due, together with any penalty imposed.

There is some good news, as you might have heard reported already, as HMRC intends to introduce a points-based system to replace the automatic £100 fine. This could begin as early as the 2019 tax year. But, that hasn’t been introduced yet. But judging by the number of late returns this year, it seems many individuals who completed a self assessment return seem to have believed the penalty charge was already withdrawn.

That’s not the case!

Don’t wait for HMRC to chase you!

If you’ve already received a payment demand call the HMRC office that sent you the letter as soon as possible. You need to notify them that you need more time in order to pay what you owe, or to agree a payment plan over a period of time.

You can also contact HMRC’s Business Payment Support Service, even if you’re not a business, on 0300 200 3835. They are open Monday to Friday, 8am to 8pm, and Saturday and Sunday, 8am to 4pm. You might be able to set up an agreed plan to repay in installments.

Or call me. If you haven’t submitted your 2017-18 tax return yet, get in touch with me now and I’ll help you minimise their exposure to penalties.

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