Top Ten Self Assessment Tips as deadline approaches

The deadline for filing tax returns is Wednesday 31 January 2007 and despite the fact that missing it could mean a penalty of £100, many people succumb to the HMRC fine rather than completing their return on time.

The Institute of Chartered Accountants in England & Wales (ICAEW) is encouraging taxpayers to make completion of their Self Assessment forms a priority this January. On top of the automatic penalty of £100 charged for returns not received by 1 February, if the tax return is still outstanding by 31 July a second £100 fine is incurred. A penalty can also be imposed based on the amount of tax owed for the year if returns are still overdue 12 months after the filing date.

Jane Moore, Technical Manager at the ICAEW Tax Faculty, says “It’s true that tax returns can be complicated and confusing, and this often depends far more on the circumstances of the taxpayer rather than their wealth, but missing the deadline is just not worth the penalties.

“The ICAEW has produced a list of ‘top tips’ for the 2007 deadline which provide sound guidance for those with relatively straightforward affairs; but if you find yourself struggling with the form, contact a chartered accountant. We can provide professional advice and save a lot of time and stress.”

If you’re finding it difficult to know where to start the ICAEW’s top tips can help:

Top Tax Return Tips

1. You may not need to complete a self assessment tax return at all. Not everyone needs to, but if you have been sent one, then you have to complete it and send it back even if you have no income at all. Ask HMRC if you need to do one in future.

2. You may have heard that the Government had plans to change the tax return filing deadlines in 2008. After much discussion, it has been agreed that the 31 January deadline will be retained for online filing, but that from 2008, the deadline for filing paper tax returns will be brought forward to 31 October. However there is no change this year.

3. If you haven’t been sent a self assessment tax return but have a new source of income or capital gains in 2005/06 on which you need to pay tax, you will need to ask for a tax return.

4. A form that is not completed correctly can be rejected by the Revenue. It is therefore important to carefully check that there are no errors. Don’t forget to sign and date the form and try not to leave any blanks and make sure you fill in all the boxes which apply to you.

5. Online filing is a good way to make sure that your form reaches HMRC safely since you immediately get a receipt. A receipt is never available for filing a paper tax return and instant calculation of your tax means that you know immediately how much you will have to pay and when.

6. If you want to complete your form online you will need a User ID and a chosen password. These take a week to come through so make sure you do this before 24 January.

7. If you need to send in supporting papers, you can still file your tax return online and then send in the hard copies of the extra papers by post.

8. Records of all information used to complete tax returns must be kept for 22 months after the end of the tax year, or for 5 years and 10 months for those carrying on a business or who have income from letting out property. There is a maximum penalty of up to £3,000 for each tax year for which records have not been kept.

9. Compare the return with the previous year’s form. If there are any significant changes note the explanation for them on the form.

10. If you want to claim a repayment of tax and haven’t been sent a tax return, then you only need to complete a Form R40, Claim for Repayment.

The top tips are part of the ICAEW’s aim to help people meet the tax return deadlines, avoid penalties and try to demystify the complex and complicated tax system in the UK.

Further information and advice can also be found at www.hmrc.gov.uk