Originally intended to be easier, completing a Self Assessment tax return (SA100) is not always that simple a process. In fact, a survey by the Chartered Institute of Taxation showed that 74% of our MPs needed professional help with their own tax forms!
Deadlines
Anyone wanting the Revenue to calculate their tax for them should send in their SA100 return by 30th September, or file it online by the end of December. After that date the tax return must include a tax calculation.
The absolute deadline for filing a 2001/02 return is 31st January 2003. Submitting the form after this date, with any late payment of tax, results in a penalty of up to £100 along with interest on the tax.
Any tax unpaid by 28th February 2003 will attract a five per cent surcharge on the amount outstanding. If the return has still not been submitted by 31st July 2003, there is a further £100 fixed penalty and a further five per cent surcharge on unpaid tax.
PAYE codings
A key reason for filing before 30th September was to allow underpayments of tax (of up to £2,000) to be clawed back through the following year's PAYE code, where at least some income is taxed in that way. Filing the return after 30th September means that any underpayment must be paid in one lump sum by 31st January 2003.
New sources of income
For new sources of income arising in a tax year, or any capital receipts that could be subject to capital gains tax, notification of these new sources has to be made to the Revenue by 5th October following the year of assessment. So for new sources of income arising in the year to 5 April 2002 (2001/2002), the Revenue need to be notified by 5th October 2002. If a return has not been received and there is income to be notified, a request for a return should be made direct to the Revenue.
If the only income received is taxed at source and there are no capital gains, then this notification deadline is usually ignored. The Revenue can impose a penalty up to 100% of the tax payable where they are notified later than the deadline of any information that they should have been made aware of before the deadline. Any new self-employment income should notified to the Revenue anyway for Class 2 NIC purposes within two months of commencement to avoid the £100 NIC penalty.
Records
For all sources of income, records of all information used to complete tax returns must be kept (up to 6 years), otherwise this can be another reason for a penalty to be imposed. There is a maximum penalty of up to £3,000 for each tax year for which records have not been kept.
Although the filing deadline is 31st January, it is generally good practice to file the return well before this date where possible in order to leave time to spot any mistakes and correct them before tax becomes payable. As far as enquiries go, it is generally the case that the Revenue will view early filers as' less of a risk'.
Lost returns
There is also the problem of lost tax returns to consider. The Revenue have admitted to losing tax returns during this year (2002). Filing earlier than 31st January by hand, or by recorded delivery, will ensure that there is time to check that the form has been received and not lost.
Internet filing
The Inland Revenue is keen for taxpayers to use Internet filing. It's not always working, but for those intrepid taxpayers wishing to use this method of filing rather than using their accountant or agent, they can register to do this on the Inland Revenue's Website. The process takes about a week, so don't leave it too late.
The 'user' will be sent a User ID by post. The User ID and a chosen password are needed to send the tax return by email. A copy of anything sent over the Internet should be kept on file for future reference. One advantage of submitting the return online is that you receive an acknowledgement that the form has been received. The tax bill is also instantly calculated.
Errors
A return that is 'not completed correctly' can be rejected by the Revenue. It is therefore important to carefully check that there are no errors or omissions before submission and that the form is signed and dated.
Enquiries
The Revenue has up to 31st January following (ie 2004 in respect of the 2002 return) to review a tax return and raise questions about it. (see following article) Taxpayers who discover they have made an error in their return also have until 31st January following to advise the Revenue and made a "repair". Interest is levied on tax paid late, but interest may be credited where there is an overpayment. (Extract courtesy Accountingweb)
The aforegoing information is provided for interest purposes only and should not be construed as advice in any form. Should you wish to use this information please check with us first to ensure that there are no changes, but also to confirm that it is applicable and valid to your circumstances. We accept no liability for information used without prior reference to us and confirmed in writing.