At Prime Accountants, we can assist you in fulfilling your self-assessment obligations by providing guidance on the rules and penalties associated with non-compliance. Additionally, our team can prepare your tax return and offer advice on any payments that may be required to be made to HMRC.
It is important to note that under the self-assessment system, it is the individual’s responsibility to ensure that their tax liability is accurately calculated and that any outstanding taxes are settled by the due date.
THE SELF-ASSESSMENT CYCLE
Tax returns are typically issued shortly after the end of the fiscal year, which runs from 6 April to the following 5 April. Those who are self-employed or company directors are among those who are typically notified by HMRC that they need to file a tax return. If a taxpayer is not notified but has tax due, they should inform HMRC so that a return can be issued if necessary.
The deadline for filing a tax return is usually 31 January following the end of the fiscal year, although there have been recent concessions due to COVID. If the return is filed in ‘paper’ format, it must be submitted by 31 October 2023. After this date, the return must be filed online, or penalties may apply.
PENALTIES
If you fail to file your tax return by the due date, which is normally 31 January following the end of the fiscal year, you will be charged an immediate penalty of £100, even if you have no tax to pay or have already paid the tax due. The deadline for filing by ‘paper’ is usually 31 October, while the deadline for online filing is 31 January.
If your return is filed more than three months late, you will face a daily penalty of £10, up to a maximum of £900. If your return is more than six months late, you will incur an additional penalty of £300 or 5% of the tax due, whichever is higher. If your return is over 12 months late, a further penalty of £300 or 5% of the tax due, whichever is higher, will be charged. In cases where the failure to file is particularly serious, a penalty of up to 100% of the tax due may be imposed.
CALCULATING THE TAX LIABILITY AND ‘CODING OUT’ AN UNDERPAYMENT
If a taxpayer wishes to know their tax liability in advance, they may request HMRC to compute it before the tax is due. However, in such cases, the tax return must be completed and submitted by 31 October following the fiscal year. This deadline also applies if the taxpayer wants HMRC to collect any tax underpayment through their tax code, which is known as ‘coding out’. If the taxpayer chooses to file their return online, HMRC will extend the deadline to 30 December. Whether the tax liability is calculated by the taxpayer or HMRC, there will be only one assessment that will cover all the tax liabilities for the tax year.
CHANGES TO THE TAX RETURN
CORRECTIONS/AMENDMENTS
HMRC has the authority to correct a self-assessment if there are any obvious errors or mistakes in the return.
However, individuals also have the option to amend their self-assessment by notifying HMRC within 12 months of the filing date.
ENQUIRIES
HMRC has the authority to investigate any tax return by issuing a written notice. Generally, HMRC has 12 months from the filing date to initiate an investigation.
If HMRC doesn’t investigate, the return will be considered final and binding unless the taxpayer makes a claim for overpayment relief or HMRC makes a discovery.
It’s important to note that HMRC can’t question any entry on a tax return without starting an official enquiry, which is primarily intended to identify any errors or omissions resulting in an understatement of tax due. However, an enquiry doesn’t necessarily imply that a return is incorrect.
If an enquiry is initiated, we will receive a letter from HMRC specifying the information required to verify the return, and we will contact you to discuss the matter.
KEEPING RECORDS
It is important for taxpayers to maintain proper records of their income, expenses, and claimed reliefs in order to satisfy HMRC’s requirements in case of an enquiry into their tax return. These records should include documentation provided by the payee for all types of income received by the taxpayer, and should support any claimed expenses. By maintaining accurate records, taxpayers can help ensure that any enquiries by HMRC are resolved efficiently and without undue delay.
HOW WE CAN HELP
At Prime Accountants, we offer tax return preparation services for individuals subject to personal tax self-assessment in the UK. Additionally, we provide advice on the appropriate payments to be made on account. If an enquiry is made by HMRC into your tax return, we are available to help address any queries they may have. We encourage you to reach out to us at Prime Accountants for assistance.
