Taking away the pain of tax self-assessment

Filling your tax return is still one of the most unpopular jobs of the year but the HMRC has tough measures in place for those who fail to file a return.

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Louise Somerset
Published: 27 Jan 2020 Updated: 13 Jun 2022

Over 11 million tax returns are due to be filed each year. Nearly half of these are filed in January, often in a rush in what are now the final days leading up to the 31 January deadline. Filling in a tax return remains one of the most unpopular jobs of the year and many people understandably put it off for as long as possible.

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This reluctance is compounded by the increasing complexity of the rules. With the current number of pages in the Tolley’s Yellow and Orange tax handbooks covering tax legislation standing at over 25,000, tax really is taxing for many people, particularly those trying to tackle their tax returns themselves.

HMRC has tough measures in place for those who fail to file a return. For just one day’s delay in submitting their return, taxpayers face a fine of £100. This escalates progressively; there are further penalties if the return is more than 3 months, 6 months and then 12 months late and also separate penalties if tax remains unpaid. These include tax geared penalties.. To make matters worse, HMRC has increasing powers to investigate and penalise people for non-submission and non-payment. Tax returns need to be dealt with, no matter how onerous the task.

We find that not everyone is sure whether or not they have to prepare and submit a self-assessment tax return. HMRC will not always know to ask you to complete a form, particularly if you have new sources of income.

You always need to submit a tax return if you have been issued with one by HMRC. There can also be a requirement to notify a liability to HMRC, and this must be done by 5 October following the tax year end. In general, you will only need to notify a liability if you have income and/or capital gains tax to pay for the year, after deducting allowances.

If you haven’t received a notice to file a tax return, have missed the notification deadline but have a potential tax liability, all is not lost. You should contact HMRC to get a return issued. This will have a filing deadline based on its date of issue but there does remain a potential penalty based on tax unpaid as at 31 January. Making a payment on account is recommend in such circumstances.

The types of scenario that may give rise to a requirement to notify HMRC, where there is also a tax liability, include if you:

  • are liable for the high income child benefit charge;
  • generate self-employed or partnership income;
  • receive interest or dividend income in excess of your various allowances;
  • receive rental income;
  • have a capital gain in excess of the annual exemption;
  • receive foreign income;
  • do anything else that could give rise to an additional tax liability.

You may also wish to submit a tax return to claim tax reliefs, for example charitable contributions, some pension contributions or specific reliefs on investments.

The process can be particularly difficult if you have a lot of assets, own more than one property, have international interests, multiple investments or are a company shareholder. If you have sources of income not yet confirmed, it is possible to put in provisional figures and then submit final figures afterwards. This is better than not submitting anything at all.

There is no magic bullet to collecting tax return information. It helps to be organised through the tax year, filing all relevant information as it comes in, rather than having a huge scramble at the end of the tax year. If your circumstances are particularly complicated, it is worth starting to gather all the relevant information well ahead of time.

Our private client tax team are on hand to help you though the process. We will work with you to understand what you need to submit and when. Our specialists cover all types of tax returns for UK and non-UK individuals, trusts, partnerships and companies. We can liaise with HMRC on your behalf as well as with tax advisers in other countries to provide a joined-up service, as well as collating information from various third parties to complete your return.

In the longer-term, we can also review your personal and financial affairs to optimise your tax position. In addition, our in-house tax investigation service can help you deal with any HMRC enquiries.

Ultimately we are here to help, whatever your circumstances.

Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. Clients should always seek appropriate tax advice from their financial adviser.

Ref: NTAJ14032038

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By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.


This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.