Don't Be Spooked by the October Tax Return Deadline

September 2015

Failure to file your tax return on time, now leads to automatic penalties being issued by HM Revenue & Customs (HMRC) which go far beyond the initial £100.

A few years ago, HMRC revamped the late filing penalty regime to make it much more severe - gone are the days where penalties can be mitigated if you have little or no tax outstanding.

31 October 2015 is the deadline for the filing of paper tax returns for the year ended 5 April 2015 (2015 tax return), and although the filing deadline shares a spot on the calendar with Halloween, it doesn’t have to be a scary time for small business owners and taxpayers.

There are many advantages of filing your self assessment tax return ahead of the deadline:

Risk of errors is reduced

If you prepare your tax return at the last minute and have to rush it in order to meet the deadline, you are more likely to make a mistake. Therefore, getting your tax return completed well ahead of the deadline should mean your tax return is more accurate. Even a 'careless error' can cost you up to 30% of the tax at stake as HMRC are less forgiving than they used to be.

Planning

Preparing your records early will leave time for your accountant to consider if there are any tax planning opportunities available, such as making sure you have utilised all of your tax reliefs and allowances.  Remember, the tax office has no obligation to help you save tax.

Cashflow

Once you have prepared your tax return, your tax liability can be calculated. Your income tax liability for your 2015 tax return is due by 31 January 2016, regardless if you file your return early. So the sooner you prepare your return, the sooner you can start looking at your finances and deciding on what you need to put aside to cover your tax bill.

Avoid penalties and interest

If you are late with your tax return, you will face harsh late filing penalties. And if you are late with your tax payments, you will face interest and possible late payment penalties.

Peace of mind

More than 80% of taxpayers now choose to file their tax returns online- which as it says above - allows 2015 tax returns to be filed by 31 January 2016. However, as it clashes with the festive period, some taxpayers leave their tax returns until the New Year. But why not get it done ahead of the holidays and rest easy over Christmas?

I don't think I need a tax return

HMRC should write to you annually if they think you need to file a tax return. If your circumstances have changed and you think you no longer need to file a return, you can contact them and if they agree with you, they can remove you from the self-assessment system.

Some words of warning though:

Do I need a tax return?

You may need to complete a tax return if any of the following apply:

This list is not exhaustive as there are other instances when a tax return may be required, but these are less common.

You need to inform HMRC by 5 October following the end of the tax year in which it happened. The tax year runs from 6 April to the following 5 April.

So, if your self-employment started November 2015, that would fall into the tax year ended 5 April 2016. Therefore, you would need to inform HMRC by 5 October 2016. But it’s best practice to inform HMRC that you may need to complete a tax return as soon as possible, so avoid leaving it until the last minute.

We can help

The costs of delays in dealing with your affairs can be severe, so you should avoid leaving your tax return until the last minute. Your local TaxAssist Accountant would be happy to provide you with the following services:

Your local TaxAssist Accountant can take care of your tax affairs and responsibilities, leaving you free to concentrate on your business. Contact us today to find out more about what we can do for you on 0800 0523 555.