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Accountants in Cumbria are warning taxpayers that those who fail to meet the January 31 deadline will incur a penalty – even if they don’t owe any tax.
To help avoid the January blues, the experts have some tips for filing online.
Sophie Tyson, co-chair, Cumberland Society of Chartered Accountants said: “Taxpayers who miss the deadline will face penalties, which are completely avoidable if they file online and on-time. Those filing after this date will incur a fixed £100 penalty regardless of how much tax they owe.
“In addition, if the tax return is over three months late there is now a £10 daily charge which will be added for every further day it isn’t filed. This can mean a further penalty of up to £900. A paper tax return filed after 31 January will already be more than three months late, so file online instead.”
To avoid these costly new fines tips include:
• Consider if you need to do a return: Not everyone has to do a self-assessment tax return, but if HMRC has sent you one, or has sent you a Notice to file, you must make a return. Even if you haven’t been asked for one, you may still need to file a tax return if you had a new source of income or capital gains in 2010/11 on which you need to pay tax. If this applies to you, tell HMRC right away.
• If you submit a paper return now, it will be processed, but you will have to pay a £100 penalty for being late: There are two separate deadlines for the tax return: one for filing on paper and another for electronic filing. For paper filing the deadline was October 31 2011. If you file online through the HMRC website, you must do it by January 31 2012.
• First time filing online: Taxpayers completing an online tax return for the first time need to register for online filing. With less than two weeks to go it is important that you register now if you need to, because it can take up to seven working days to receive your HMRC activation code, and time is running out.
• Have all the necessary information to hand: You will need details about your employment income provided by your employer as well as any interest received shown on your bank statements and information on dividends from shares etc. Overseas income and mistakes on self-employed accounts often result in wrong submissions. Also, remember to claim any deductions such as gift aid donations and pension contributions.
• Compare the return with last year’s: If there are any significant changes explain why on the form. There is white space where you can make notes which will help to avoid unnecessary queries from HMRC later.
• Finally, save everything: Save a copy of your final return and print a copy of the receipt you receive when you submit it. You must keep records of all information used to complete your tax returns for 22 months after the end of the tax year or for 5 years and 10 months for those with a business or 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.
Sophie added: “These tips are for more straightforward cases but if you do need help, please contact an ICAEW chartered accountant. We are continually urging government to simplify the taxation system to ensure it is as clear and efficient as possible to help taxpayers when it comes to the deadline.”