Don't leave your self assessment too late + filing tips
As thousands of business people rush to complete their self assessment income tax forms this month prior to the 31st January deadline, a leading tax expert is warning people not to leave it too late, and at the same time is calling for simplification of the process.
Richard Mannion, Head of Tax at Bristol-based accountants Solomon Hare LLP, believes that those who return their self assessment forms at the last minute or don't meet the deadline are heightening the potential risk of being investigated.
The self assessment tax system covers around 9 million taxpayers and individuals have to provide details of their income, pension contributions, share dividends and interest on savings. Last year around 10% of people missed the January deadline and incurred a £100 penalty fine. If another deadline on July 31 is missed, then another £100 penalty is incurred.
Mannion gives the following advice to those still to send in their self assessment forms and to receive a tax bill or refund:
- Even if you have not received a tax return form for the year-ended 5 April 2005 you may still need to complete one. If you embarked on self-employment or had some new source of untaxed income (e.g. because you let a property) during that time period, then you definitely need to fill in a tax return. Similarly you will need to put your hand up if you had a capital gain of more than £8,200. If you think you may need to pay tax, contact HMRC immediately.
- Take care to complete the return fully and correctly. Each year, a surprising number of tax returns are rejected due to simple errors, such as people forgetting to sign the form or ticking boxes and then omitting relevant information.
- There are strict rules about keeping tax records. If you are not in business, keep the records used to complete your tax return for 22 months from the end of the tax year. For the 2005 tax return, this means keeping records until at least 31 January 2007.
- If you are in business, you must keep your records for five years from the 31 January following the tax year. So for the 2005 return, this means 31 January 2011. All documentation should preferably be kept for six years.
- Every year a large number of taxpayers fail to claim tax refunds that they are entitled to. Common examples are higher rate taxpayers who paid pension contributions and employees whose PAYE coding notice was inaccurate. These individuals should inform their accountants or write to HMRC as they may be due a refund.
- Often pensioners have had excess tax deducted from their bank interest and they should file a tax repayment claim (on the tax form R40).
- Check your tax bills - a recent National Audit Office report found that more than half a million tax returns were incorrectly processed in 2003-4.
Posted January 11, 2006
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