Were you amongst the 2,600 people who submitted their tax return on Christmas Day?

According to figures just released by HM Revenue & Customs, over 2,600 decided their top priority this Christmas Day was submitting their 2017/18 tax return.

Compared with last year’s figures, however, these were the “early birds”.  Over 30,000 people waited until one hour before midnight 31 January 2018 before pressing the submit button.  

What are the risks?

“I like to live dangerously” you might say and anyway, what can possibly go wrong filling in the same forms as last year?  After all, nothing’s changed . . . . . . . . .er, has it?  These are the key risks leaving it until the last minute:

  • Submitting a partially completed return or one with estimated figures is treated by HMRC as a failure to submit and the same fines/penalties follow.  It is therefore essential you have assembled ALL the paperwork you need e.g. P60, building society interest, dividends, buy to let income/expenditure, as well as all your business records if you are self-employed.
  • Missing out on tax reliefs, e.g. gift aided charitable donations, eligible business expenses incurred personally, pension contributions.
  • Much more importantly is omitting some of your income. HMRC invariably receives a separate notification that someone has paid you and they are getting better every year at matching this information with what you declare on your tax return.
  • If some of your income gets missed from your return you will get a very unpleasant letter from HMRC which asks the simple menacing question:  “Are you quite sure you haven’t missed out some of your income?”  At this point, consider getting some professional help because anything less than full cooperation and a full confession to HMRC can result in a custodial.  Ask Lester Piggott.
  • The other main risk is that even if you get your return in with seconds to spare, remember that all the tax you owe is also due for payment by midnight on 31 January 2019.  Oh, nearly forgot, if you think all the tax rules, rates, reliefs etc are just the same as last year, just ask yourself what happens in the Budget every year. 

I'm taxed under PAYE - this doesn't affect me - right?

Regular readers will know that the answer to all tax questions starts with “it depends”.  Tick any of these boxes and you will still need to submit a 2017/18 tax return:

  • You were a company director
  • You have property-related rental income in excess of £2,500
  • You have income from self-employment over £1,000
  • You have claimed child benefit and either you or your partner’s income exceeded £50,000
  • You have profits liable to capital gains tax 

Oops!

It’s now 1 February 2019 and you still haven’t pressed “submit”.  What happens next?

  • An automatic £100 penalty is applied if the return is up to 3 months’ late.  After that, it’s £10 per day up to £900 and after that . . . .  . . (it just keeps getting worse).
  • And almost certainly the tax due will be late so you can count on another 5% of the tax unpaid at 30 days, 6 months and 12 months.
  • If you think you have a “reasonable excuse” for late filing, you can appeal to HMRC.

-       Death, serious illness, fire, flood, all count, but “the dog ate my homework” type of excuse will not cut the mustard.

Is there an alternative?

You can avoid all the above risks and problems by paying your accountant a modest fee to take away all these headaches and get your tax return correct and submitted on time.

Just don’t leave it until Thursday 31 January 2019 before asking for help!