Christmas is coming and you’re probably looking forward to switching off from work for a while – but don’t forget your looming self-assessment deadline...
As the build-up to the festive season gathers pace you mustn’t forget the much less enjoyable prospect of paying taxes!
No sooner are the New Year streamers and Christmas gift wrap in the recycling than many taxpayers realise they face a rush to complete and submit their annual self-assessment tax return to HM Revenue and Customs (HMRC).
Each tax year certain individuals – most commonly, but not exclusively, those who are in receipt of untaxed income such as self-employment income, rents or bank interest – are required to register for self-assessment, complete a tax return and pay over to HMRC any tax they owe by January 31 following the end of the tax year.
The deadline to register with HMRC for a 2013/14 return was October 5, so what happens to taxpayers who missed the date?
Quite simply, they need to register with HMRC as soon as possible in order to keep potential penalties to a minimum.
A ‘failure to notify penalty’ is calculated as a percentage of the tax unpaid as a result of the failure – and it can range from 0 per cent right up to a maximum of 100 per cent.
The severity of the penalty depends on whether the taxpayer has voluntarily notified HMRC of the liability, or whether the taxman has found the taxpayer out.
In addition, HMRC will take into account whether or not it thinks the taxpayer was deliberately concealing matters to avoid paying tax.
To be in with a chance of having a 0 per cent penalty levied, therefore, it’s imperative that affected individuals register for self-assessment without delay.
Any tax due needs to be paid to HMRC by January 31, 2015, to avoid interest charges as well as penalties.
l If you would like more information on how to register for self-assessment visit www.duntop.co.uk.
○ Matt Herd is an associate director of Duncan & Toplis based in Boston.