When do I need to file my tax return by?
30th September following end of tax year if filing paper version and 31st January for electronic version.
The UK tax year runs from 06 April to 05 April.
You have almost 10 months to compile the relevant information for your tax return if filed electronically before the deadline of 31st January
The filing deadline is also the payment deadline for tax due. Automatic financial penalties apply hereafter, with interest and further penalties accruing the longer it remains unpaid.
HMRC have notified me that I have a refund. Is this true?
Not necessarily. One of the very few benefits of HMRC communicating by post is that you can be sure that any email, text or phone call you receive claiming to be HMRC will be a scam. They usually contain website links or phone numbers to call or ask you to confirm your personal details in order to obtain money and commit fraud. A rule to remember is, HMRC phone numbers always begin with 0300 but it is extremely unlikely they will be phoning you. It is possible to sign up for email reminders, but these are purely just reminders and HMRC will NEVER email to notify you of an amount of tax to be paid or that you have a tax refund to claim. If you do receive such an email, you should forward it to firstname.lastname@example.org , report it as spam within your email and then delete it. HMRC will not reply to your email submission, but rest assured they do take scam and phishing emails seriously and do investigate them.
One way of identifying a legitimate HMRC letter is by lining it up with a standard sheet of A4 paper – HMRC letters are usually a slightly different paper size, a size that only HMRC have access to for security reasons.
What are payments on account?
HMRC payments on account are advance payments towards your next year’s tax bill. When a self-employed individual’s tax bill is over £1,000 for the tax year, HMRC will require you to make two payments in advance with each payment being half your previous year’s tax bill. It can be thought of as a way of paying off some of your future tax bill with the first instalment being due by 31st January and the second payment on account being due by 31st July.
Payments on account do not apply if your tax bill is below £1,000 or more than 80% of your tax was deducted at source for the previous year, through PAYE for example.
Self-employed workers know that income can fluctuate. If your income during the year is decreasing or you anticipate it dropping significantly then an application can usually be made to reduce the next payment due, sometimes to zero.
Why have I received a tax return?
HMRC issue tax returns to people who have untaxed sources of income that can’t be taxed at source, for example, rental income, foreign pensions and self-employment. People who owe tax on their savings income or dividends may need to file a tax return if the tax due cannot be taken through their tax code.
If you are in doubt as to why a tax return has been issued to you, you should phone the HMRC self assessment helpline on 0300 200 3300 or contact IMFCoult & Co for further advice.
Can I stop filing a tax return?
Not unless HMRC say so. If your income for the last couple of years is taxed at source, for example you are employed and receive a P60 document, or your pension is taxed at source, then HMRC know this and usually send out a letter to advise you that it no longer requires a self assessment return from you in future. Of course, if circumstances change then you would have to begin submitting a self assessment once again.
Will HMRC find out if I have undeclared income?
Eventually, yes. HMRC now do not solely rely on information submitted on tax returns — in 2010 it rolled out its ‘Connect’ computer system developed by BAE Systems Applied Intelligence which draws information from British Overseas Territories and known tax havens, as well as over 60 other countries (known as the “common reporting standard” rules). Not only this, but Connect cross-references information from UK government databases such as DVLA, Land Registry and local councils and even accesses insurance databases, credit reference agencies, online property adverts and eBay auction pages to obtain intelligence and discover undeclared income. One of the most powerful arms of Connect casting an eye over all Visa and MasterCard payment transactions.
This means that the work that once may have taken HMRC weeks or even months to trawl through can now be completed by a computer using algorithms in a matter of seconds. For example, if an individual owns an expensive car but doesn’t have the declared income to purchase and support the ownership of such a car, Connect can discover this and HMRC can decide whether an investigation should take place and of what magnitude.
Connect aside, social media provides HMRC with an abundance of information, and inspectors will even manually trawl online profiles to look for evidence of a lifestyle which doesn’t equate to declared income.
Is it easy is it to change accountant?
Very easy. Once you have chosen to use IMFCoult and signed our engagement letter you can then provide us with the contact details of your current accountant and we can do the rest to make the transition seamless.