SELF-ASSESSMENT. Tax returns. Providing figures

Transcription

1 Self-assessment

2 SELF-ASSESSMENT Some people are under the impression that they only need to answer the questions that the tax authorities ask and that they do not have to volunteer any information about unusual gains or income they have received. Nothing could be further from the truth. In fact, all taxpayers are responsible for ensuring that they pay the right amount of tax on the set payment dates. If you have to make tax payments, you are within the self-assessment system. You have to complete an annual tax return and the onus is on you to provide HM Revenue & Customs (HMRC) with full details of all your income and you are also required to pay your tax, whether or not you receive a demand. If you do not receive tax returns you must notify HMRC if you have further tax to pay for any tax year by the following 5 October. The aim of this briefing is to set out the main features of the self-assessment system. Tax returns The normal tax return now consists of a six-page form (SA100) summarising your income, deductions and capital gains, with a four page additional information supplementary page form (SA101) for less common types of income and reliefs. HMRC now also issues a four-page short tax return (SA200) to people with relatively simple tax affairs. For the main return, there are also specific supplementary pages for particular types of income and circumstances. For example, there are extra pages for employment income, self-employment income, foreign income, income from land and property, capital gains and partnership income. Most people do not come within self-assessment, because any tax they have to pay is deducted at source from their income. They do not have to complete a tax return unless their circumstances change. If you are one of those people who does have to complete annual returns, the chances are that you are selfemployed, or a company director, or a higher rate taxpayer with investment income. There are also a few pensioners who have to complete returns. Tax returns are normally sent out in April soon after the end of the tax year. They have to be sent back to HMRC by: 31 October for paper returns, whether or not you want HMRC to make the tax calculation. 31 January if you decide to file online. Providing figures You must complete your return with figures for each type of your income. Entries such as see P11D or to be advised are not acceptable. Sometimes the exact figure cannot be known in time. In these circumstances, you should then make an estimate and bring it to HMRC s attention. Estimates are only acceptable where there is a genuine reason for them, and the correct figures must be supplied as soon as possible. You can correct estimates and make any other amendments to a self-assessment for up to a year after the 31 January filing date, even for paper returns. The final amendment date for 2013/14 returns is therefore 31 January All Rights Reserved Page 1 of 3

3 What HMRC does with your return When HMRC receives your return, all the information is transferred into a computer which checks for obvious errors. The main checking is done later. HMRC must normally start any enquiries into a return within 12 months of receipt of the return, although a longer period is allowed where the return is made late, or is negligently or fraudulently completed. Statements of account HMRC will send you statements of account periodically. These statements are consecutively numbered and show the payments due on the basis of the return, payments made since the last statement and any outstanding balance of tax. Where tax is outstanding, the statements are sent to you monthly; otherwise they are only sent out when necessary, such as before a payment date. HMRC determinations If you do not make your tax return on time, HMRC will estimate the tax due. This is called a determination, and payment of the tax is enforced. You will not have a right of appeal and you cannot postpone the tax payment. The determination is displaced only when you send in a self-assessment return. Record keeping All taxpayers, not just those within self-assessment, have to keep all the records necessary for making a tax return. There are penalties for failing to do so. You must keep records of your income and documents supporting any expenses, deductions and reliefs that you claim. Documents showing tax deducted, such as dividend vouchers, should normally be kept in their original form. Employers have to provide enough information to employees so that they can make their own selfassessments. In practice, accountants help clients prepare their returns under self-assessment, but as the taxpayer, you remain responsible for keeping the necessary records and producing information promptly. Payment of tax There are three tax payment dates for each tax year: 31 January during the tax year for the first payment on account. 31 July after the end of the tax year for the second payment on account. 31 January after the end of the tax year (the fixed filing date) for the balancing payment and any capital gains tax. A balancing repayment will also be made by 31 January, if necessary. Each payment on account is half the previous year s income tax liability on all sources of income, net of any tax deducted at source. If you believe your tax liability for the current year will be less than that of the previous year, you can make a claim to reduce your payments on account, but you have to give reasons. Interest and penalties Self-assessment puts the burden on you as the taxpayer to make assessments and pay the tax. A system of automatic penalties and interest and surcharges on late tax payments has been designed to ensure that taxpayers comply with their obligations and keep their affairs up to date. All Rights Reserved Page 2 of 3

4 How we can help We can help you with strategic tax planning. If you do not have a suitable accountant or tax specialist, we can recommend one to help you complete your tax return and to advise you on related tax matters. Self-assessment key dates April HMRC issues tax returns for the tax year just ended. May 1: Penalty on tax still unpaid for last but one tax year 31: Deadline for employers to provide P60s to employees for last tax year. July 6: Deadline for employers to provide P11Ds to employees for last tax year. 31: 2nd payment on account for last tax year. 31: Further penalty on tax still unpaid for last but one tax year. October 5: Deadline to notify HMRC that tax will be due for last tax year (for taxpayers not sent a return). 31: Deadline for submission of paper tax returns for the last tax year (except where return was issued after 31 July, when deadline is three months after issue). December 30: Deadline for filing tax returns online for the last tax year to have unpaid tax of up to 3,000 collected through PAYE. January 31: Deadline for filing of online tax returns for the last tax year. 31: Balancing tax payment and capital gains tax for the last tax year and first payment on account for present tax year. February Tax determinations and fixed penalty notices issued where tax return not filed for last tax year (from February onwards). Levels and bases of, and reliefs from, taxation can change and the value of tax reliefs depends on your individual circumstances. This publication is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The Financial Conduct Authority (FCA) does not regulate tax advice, so it is outside the investment protection rules of the Financial Services and Markets Act and the Financial Services Compensation Scheme. This publication represents our understanding of law and HM Revenue & Customs practice as at April All Rights Reserved Page 3 of 3

5 Thank you for your interest in this Essential Guide. For further information or if you would like to discuss any aspect of the guide, please contact us. EA Financial Solutions Ltd 869 High Road Finchley London N12 8QA +44(0) The Financial Conduct Authority (FCA) does not regulate tax advice. Tax rules are subject to change. All Rights Reserved