Tax- Self Assessment

HM Revenue & Customs (HMRC) has recently launched a new advertising campaign fronted by newsreader Moira Stewart to highlight the filing deadlines for Self Assessment tax returns and, in particular, to emphasise that those wishing to submit a paper return have until 31 October to do so. The 31 January deadline remains for those who submit their return online.

It is arguable that HMRC is moving towards a position where all returns must be filed online and the new October deadline is, perhaps, a step to achieving this. What is certain is that a failure to comply with this new deadline will be costly, as an automatic £100 penalty will be charged.

Who is affected?
HMRC say that roughly one in three taxpayers is required to file a tax return. Typically this covers company directors, the self-employed and those who receive any income that is not taxed at source, e.g. rents from property letting.  Up to now, those required to file returns and who prefer to do so in paper form, will have taken comfort from the 10-month window from April to January 31, which means the new tighter deadline will be an unwelcome burden.

The advantages of online filing
HMRC is keen to promote the benefits of online filing and their website lists nine reasons for doing so. At the top of the list, and obviously intended as a sweetener, is the claim that online returns are processed faster than their paper counterparts. Our experience is that this is certainly the case as paper returns can often fall into a ‘black hole’.

The other advantages acknowledge the safety and security aspects, the convenience of HMRC working out the tax bill, the ability to monitor the Self Assessment ‘account’ online – to check what is owed, etc. Again, all these emphasise the efficiency of the Revenue’s IT systems that purport to offer a more streamlined service than the traditional manual service.

Late returns – the implications
Anyone receiving a notice to file a return before 31 July and who wants to file a paper return has until Friday 31 October to do so. A notice to complete a return served after 31 July puts the paper-filing deadline back to the later of 31 October or three months following the date of issue of the notice.

A paper-filed tax return arriving after the deadline will trigger an automatic £100 penalty. Late partnership returns will attract a £100 penalty per partner. 

Another sting in the tail is that a paper return filed after 31 October allows HMRC another twelve months beyond the normal deadline to raise an enquiry into the tax return entries. This means that a late 2007/08 paper return allows HMRC up to and including 31 January 2010 to give a notice of enquiry. 

How can Anderson Strathern help?
Anderson Strathern has a team of experienced tax practitioners who provide a full tax compliance service, that includes completing tax returns using our software system, lodging completed returns online and agreeing tax liabilities with HMRC.

We can ensure you meet your filing obligation and take away the pain of completing your return. At the same time, we will alert you to any steps that might reduce your tax liabilities.

Further information
If you would like to discuss using Anderson Strathern’s tax service please contact our Head of Tax, Bruce Connelly.

This bulletin is for general information only and does not constitute legal, investment or other professional advice. Please contact us should you require advice on any particular legal issue. Anderson Strathern LLP accepts no responsibility for any loss that may arise if reliance is placed on any information or opinions expressed in this bulletin.