Records Stolen in Burglary
Q: I have yet to file my tax return as part of my records were stolen in a burglary at my business premises. Should I send an estimate of income/expenditure to the Inland Revenue or should I wait to see if the documents can be recovered?
A: The HMRC advise that you should not delay sending in your tax return just because you do not have all the information you need. If you feel that there may be the possibility that you can recover the information then you should submit your return with provisional figures, and advise the HMRC when you expect to be able to file actual figures. You must ensure that figures you provided are reasonable and take account of any information that is available for the same period.
If you feel that the records are unlikely to be recovered you should submit estimates for the period which is missing. Once again these need to be reliable estimates, and you should be aware that HMRC obviously reserve the right to investigate and ensure the figures are reasonable and consistent with similar trades and previous years figures.
Business clients should really be advised to ensure suitable back up procedures are in place to prevent problems such as this occurring. Duplicate bank statements can always be obtained as a last resort to substantiate reported figures.
Where should I send my tax return?
Q: I am still in the process of trying to complete my tax return and do not want to miss the deadline. However, I live I London and my return has to be filed in Glasgow, which is apparently where my employer’s details are kept. I have yet to pay my tax liability and wondered if I would I still have to pay the late filing penalty if Royal Mail delivered the return late?
A: I am afraid you would as it is your responsibility to ensure the return is filed on time. The only time the HMRC reduce a penalty due to a postal delay is when the return was posted in good time, and an unforeseen event occurred which disrupted the normal post service, which has led to loss or delay of the return. Examples include a fire or flood at the Post Office where the return was handled or prolonged industrial action by the Post Office staff.
However, the HMRC will allow you to take it into your nearest Inland Revenue office as they are bound to accept it, whether it will eventually be processed there or not.
Unfortunately, new guidelines issued this year mean the HMRC will not now issue receipts for hand delivered tax returns. On this basis, if you want proof of delivery you may be better advised to post the return either by recorded or special delivery to ensure receipt, as the HMRC have confirmed that it is Departmental policy to sign for items received in this way.
Will I get a late filing penalty?
Q: Even after all of the HMRC reminders, I still have not filled in my 2004/05 tax return. Can you remind me of the late filing penalty that will apply, and the last date I can submit the return without being issued with a penalty. Are there any ways that this penalty can be reduced?
A: Every year the number of taxpayers who file their income tax returns in January increases. In view of this increasing trend the HMRC have issued guidance to these last minute taxpayers on how they determine which returns are late filed. The guidance for the 2006 tax year is as follows:
- Tuesday 31 January: Tax Returns received up to midnight are on time. This includes Tax Returns received in Office letter boxes that are opened first thing on Wednesday morning.
- Wednesday 1 February: Tax Returns received up to midnight are late but incur no late-filing penalty. This includes Tax Returns received in Office letter boxes that are opened first thing on Thursday morning.
- Thursday 2 February: Tax Returns received from the morning post and onwards are late and incur a late-filing penalty of £100.
Unfortunately, negligence is not an acceptable excuse to reduce a late filing penalty. HMRC only accept a limited number of excuses such as bereavement or serious illness for not submitting your return on time. However, e ven if you cannot file your return by the deadline, if you establish how much tax you are required to pay, and make this payment so it reaches the HMRC on or before 31 January, you can reduce any £100 late filing penalty to nil. For further information on this concession, please speak to your accountant.
Interest and Surcharges?
Q: I filed my tax return before Christmas but due to cashflow problems I do not think I will be able to pay the tax I owe by the deadline of 31 st January. Will I still receive a late filing penalty of £100?
A: You will not receive the £100 penalty as you have filed your tax return before the 31 January deadline, but as you haven’t paid your tax liability for the 2004/05 tax year, the HMRC will begin to charge you interest on a daily basis starting from 00.00am on 1st February on the tax unpaid. Currently interest is being charged by the HMRC on late payment of tax at a rate of 6.5%.
You must also try to ensure that you pay the tax you owe by 28 February, as any amounts relating to the 2004/05 tax liability that are still unpaid at this date will receive an initial 5% surcharge. Also, an additional surcharge of 5% will be levied on any tax outstanding if you still have not cleared your 2004/05 tax liability more than 6 months following the filing date, which is the 31 July 2006.
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By TaxAssist Direct Ltd. Both answers and advice are offered strictly on the basis that no legal liability is created thereby. Personal circumstances may vary and TaxAssist Direct Ltd advises that individuals seek personal professional advice in all situations.
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