Have you missed the Self Assessment tax return deadline?
Have you missed the self-assessment deadline?
It is estimated by HM Revenue & Customs that 6.5% of the 11.5 million who should file their paperwork fail to lodge their self-assessment returns before the midnight on 31 January deadline.
Unfortunately missing this deadline means that you will have to pay at least £150 in fines. Despite this, there is some good news. If you can pay those penalties, there’s still time to sort out your tax affairs.
If you didn’t file on time, there is no need to panic. In this guest blog, the experts from NLA Property Insurance explain your options if you’ve failed to get your tax return in on time.
What are the penalties for self-assessment late-filing?
Missing the 31st January deadline to file your tax return means that you will most certainly now have incurred a fine. There are two types of penalties applied by HMRC for missing the self-assessment deadline:
- £100 for not filing the return on time. This is an automatic fine which applies regardless of whether any tax is owed or not. If you still don’t file a return, the next penalty is imposed on 1st May.
- £50 if you didn’t pay your tax on time, followed by a fine of 5% of the tax owed if the bill is still unpaid 30 days later.
Failure to fill in the self-assessment or pay your tax for an extended period means the penalties will increase. To calculate how much you may have to pay in penalties for the current tax year you can use the HMRC online tool for an estimate.
It is not possible for everyone to file on time and so if you believe you have a valid reason for missing the self-assessment deadline you should appeal to HMRC. It is however important to remember that HMRC will only take into consideration events that happened unexpectedly or that were beyond your control. These include:
- The death of your partner or a close relative shortly before the filing deadline
- An unplanned hospital stay
- Suffering a life-threatening illness
- A computer or software failure at the time of filing your return
- The HMRC online service was unavailable
If you believe you have a valid reason for not filing your self-assessment return, you can contact HMRC on 0300 200 3822 for further information and advice.
If you don’t have a reasonable excuse for missing the deadline, it’s not the end of the world. But it is advisable to get your taxes in order as soon as possible.
Stopping the self-assessment penalty clock
HMRC uses a time-based system to imposing penalties. Therefore getting your taxes in order as soon as possible can help you to stop the clock sooner meaning the less you have to pay. Tax professionals do this by filing a return with estimated figures then amending them later with the correct information. This method is a quick win, and perfectly above board.
NLA Director of Policy and Practice Chris Norris says "Tax can be a complicated and confusing process for landlords who are trying to cut costs by doing their returns themselves, rather than seeking specialist advice. It is possible some landlords have unwittingly disclosed less tax on letting income than they should have.
“Changes to allowable expenses and deductions have been poorly communicated and are not necessarily understood. For instance, the removal of the wear and tear allowance and what constitutes an improvement versus repair."
If uncertainty around how much tax you owe is delaying your self-assessment tax submission then this method of submit-now-check-later may buy you some time while you figure out how much you really owe. However if using this method it is important to ensure that you explain to HMRC that the figures are provisional in the additional information box on your self-assessment return and provide a date when the up-to-date information will be posted online.
The rules stipulate you can amend a self-assessment return due on 31st January 2019 up until 31st January 2020. You should pay any tax due when you file the estimated return as well.
If you overpay, HMRC will refund the extra plus interest. Should you underpay, penalties and interest will be due.
Filing a late self-assessment return
If filing a late self-assessment return, we advise you complete your tax return digitally, even if you prefer paper.
This is due to the fact that the deadline for paper returns was 31 October, and the fines for late return accumulate over time. If you fill your return in online now, the penalty will be £150, however if you submit returns by post it could cost you more around the region of £900.
It is important to remember that you will only be able to file your return and pay tax online if you are registered with the Government Gateway or Gov.uk Verify. If you have filed a self-assessment return for another year, you will already have received log-in details. Please note: this is not the same as registering for self-assessment.
If you are filing online for the first time, you need to sign up at Gov.uk for an activation code. This can take up to ten working days to arrive in the post. You need to have filed a tax return to pay any tax due so getting into the online portal is vital.
What if I can’t afford to pay my self-assessment tax?
Once you have filed a self-assessment return, you should of course pay any tax due as soon as possible to reduce any penalties. But HMRC understands there are circumstances where you may not be able to pay.
If you are struggling to pay what is due then it is advised to contact HMRC on 0300 200 3822. HMRC will usually agree payment by instalments, but for them, this will generally be a last resort. Be prepared for them to ask if you can borrow the money from family or a bank. If you cannot they will usually agree to repayment options.
HMRC will also probe you about your outstanding debt so it is important that you are able to explain why you can’t pay, and make a reasonable offer to clear your debt with them. Don’t overstretch your finances, and work out terms that work for you, not ones that leave you struggling financially.
One thing to note; HMRC does not accept credit cards, so you’ll have to make sure you have clear funds when paying in one go, or in instalments.
If you are struggling with your finances and need some additional financial advice you can get help, from several debt charities, including StepChange.
The key message to those who have missed the tax deadline is: don’t panic! HMRC are reasonable, and if you can demonstrate a willingness to organise your return and pay the tax, they will listen. Taking action and speaking to them is far more productive than ignoring the issue and hoping it goes away.
The key takeaway tips are to fill in your return as best you can now, work out the exact figures as soon as possible, and if you’re struggling with repayments contact HMRC immediately for additional guidance.
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