Tax Return Deadline is Approaching

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It comes around almost as fast as Christmas, and here we are again. The 31 January 2017 marks the deadline for filing of the 2015/16 Self-Assessment Tax Return (SATR).

Individuals who are required to submit a SATR include, the self-employed and some landlords, investors, company directors, high earners and people who have worked overseas.

Those taxpayers who fail to file their Return online by midnight on Tuesday 31 January will be subject to an automatic penalty of £100. This applies even if there is no tax to pay, or the tax is paid on time.

Tax Returns which are not filed after a further three months will be subject to daily penalties, and additional penalties will apply to Returns which remain unfiled after six and 12 months, adding up to a potential penalty of £1,600 or more.

Penalties and interest charges also apply for the late payment of tax, and these will continue to be applied until HM Revenue & Customs receives payment.

Green & Co can help with all your tax planning needs, including filing your Tax Return – please contact us for further assistance.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Self Employed Landlords: What you need to know about Digital Accounting

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By 2020 most businesses, self-employed individuals and landlords will be required to use software or apps to keep their business records and to report their income and expenditure on a quarterly basis to HM Revenue & Customs. This new regime will commence on 6 April 2018 for most small businesses. Self-Assessment tax returns will no longer be completed from 2018/19 onwards.

What records will I need to keep?

HMRC will expect businesses to scan paper invoices and receipts into software using a smartphone camera. For many businesses it is expected that the scanned evidence of income and expenditure will be automatically processed by the software into the relevant accounting entries. HMRC prefers that the following data fields are completed for each receipt or expense item:

  • Invoice date and payment received date, if cash basis being used
  • Invoice value and payment received value, if cash basis being used
  • Income or expenses category, and
  • Deducted amount/percentage for expenses.

The above is the minimum required data which will be needed to enable software to identify and categorise each transaction.

Landlords

Landlords will need to provide the following:

  • The full address of each property
  • Income and expenses attributable to each property.

Quarterly Updates

The data of income and expenditure will have to be reported quarterly, although the reports will only be summary data. Businesses will be able to see an estimate each quarter of what their liability will be, based on the summary data provided.

End of year return

A final fifth submission will be made which will incorporate a correct and complete declaration. It is proposed that this final account will have to be submitted within 9 months of the end of a period of account.

The above is subject to a period of consultation due to end in November and final details are due to be announced in December. Green & Co will keep you informed as further details/changes are announced.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Daily Penalties For 2014/15 Tax Returns Still Not Submitted

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For those whose 2014/15 self-assessment tax return was due at HMRC by 31 January 2016 but has still not been submitted, it’s now time to confront that pile of paperwork hidden away in the folder marked “To Do”.

For the majority of those in self-assessment the deadline was 31 January 2016, and if your tax return for the year ended 5 April 2015 was not submitted by that date, you should have already received a notification that you have been charged a late filing penalty of £100.

If the return was still not submitted by 30 April 2016, you will now be incurring daily penalties.  These are £10 per day up to a maximum of 90 days. Therefore, if the return remains outstanding at the end of July 2016 a further £900 is added to the £100 already levied.

If the return is six months late there is another penalty of 5% of the tax due or £300, whichever is greater, and at 12 months overdue the penalty is again, 5% of the tax due or £300, if greater. If the taxpayer is deliberately withholding information then higher, behaviour based penalties will be imposed.

And it gets worse. If the tax return is late there is a chance that any tax due is also late, so in addition to the late filing penalties, there will also be late payment penalties.

Not only are you falling short of your obligations by not meeting the self-assessment deadlines, but burying your head in the sand is a costly business.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Don’t Put Off Until January What You Can Do In July…

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It’s February again, and many an accountant and tax advisor is heaving a sigh of relief that another self-assessment deadline has passed. The month of January often puts extra pressure on accounting professionals as they endeavour to submit eleventh-hour returns before the end of the month to help their clients avoid penalties and interest on tax paid late.

Of course, you don’t have to wait until the end of January to complete your accounts or file your self assessment return.  It can be done any time after the start of the new tax year and your accountant would undoubtedly prefer to receive your books sooner rather than later.

Most businesses should be in a position to provide the information to prepare accounts after 3-4 months following their year-end, and there are advantages to completing your accounts and self-assessment return early in the tax year:

  1. You can keep a closer eye on how your business is doing and take steps to rectify any issues which crop up. This could include chasing aged debtors, resolving disputes or even deciding when to purchase fixed assets to maximise tax allowances.
  2. If there are any queries on your books, you will have a better chance of answering them if transactions for that year are still fairly fresh in your mind.
  3. You will know how much your tax liability will be that much earlier. so that you can budget better for payment. If your profits are less than in the previous year, you can also make a claim to reduce your payments on account to a level which is more in line with your liability.
  4. HMRC have a time window during which they can question anything on your return. This window is twelve months following the date of submission – so the earlier you get your return filed the sooner the window is closed.

Don’t worry – submitting your return earlier in the year doesn’t mean you also have to pay your tax earlier.  You still don’t have to settle your liability until 31st January following the end of the tax year.

So why not make a New Tax-Year resolution to get your bookwork done, your accounts prepared and your return filed as early as possible.  You will make your accountant so happy!

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

To be (In Self Assessment) or not to be (In Self Assessment) – That Is The Question!

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In the March budget HMRC announced that the tax return as we know (and love?) it is to be abolished. As we eagerly await the release of the “roadmap” in late 2015, which outlines the plan, let us remind you who should currently be submitting tax returns. This list is taken from the Gov website and is correct as at July 2015. It is not exhaustive.

You should be in self-assessment if:

  • you’re self-employed
  • you have £2,500 or more in untaxed income, e.g. from renting out a property or savings and investments
  • your savings or investment income is £10,000 or more before tax
  • you’ve made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax
  • you’re a company director – unless it’s a non-profit organisation (e.g. a charity) and you don’t get any pay or benefits
  • your income (or your partner’s) is over £50,000 and one of you claims Child Benefit
  • you have income from abroad that you need to pay tax on
  • you live abroad and have UK income
  • you receive dividends from shares and you’re a higher or additional rate taxpayer
  • your income is over £100,000
  • you’re a trustee of a trust or registered pension scheme
  • Certain other people may need to send a return (e.g. religious ministers or Lloyd’s underwriters)

For further information please contact Green & Co

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Prevent Late Payment Penalties With A Time To Pay Arrangement

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For those seasoned Self Assessors the 31 January deadline will be all too familiar. This is when your tax return is due, along with your balancing payment and the first payment on account for the current tax year (if applicable).

You may not be so aware, however, of the late payment penalties that are imposed should any tax remain unpaid at 30 days, 6 months and 12 months after the 31 January payment deadline. The penalty is 5% of the tax outstanding at that date. So, for example, if any of your 2013-14 tax payment remains unpaid at 28 February 2015, 31 July 2015 and 31 January 2016, penalties will be imposed at each of these dates, at 5% of the tax outstanding.

These penalties can be avoided if you contact HMRC prior to the date on which they are imposed, and agree a ‘time to pay arrangement’ with them. The time to pay arrangement must be agreed and in place in order for the penalties to be suspended. Late payment interest, however, cannot be prevented and will accrue until the tax bill has been settled.

So, if you find yourself unable to pay your tax, then a call to HMRC before the tax becomes due could save further self-assessment debt. The number for the HMRC Business Payment Support Service is 0300 200 3835.

For further information please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of FreeDigitalPhotos.net

Deadline Dates – April 2015

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1 April 2015

  • Payment of corporation tax liabilities for SMEs account period ended 30 June 2014 where payment is not made by instalments.
  • Reduction in main rate of corporation tax to 20%. Small profits rate is abolished except for ring-fence profits.
  • Change to emission thresholds for business cars (zero rate ends).
  • Application to defer Class 2 or 4 NICs for 2014/15 or claim exception for 2015/16.
  • Multiple contractors to advise HMRC that they wish to be treated as a single contractor for 2015/16.

5 April 2015

  • 2014/15 tax year-end.
  • Ensure personal allowances, exemptions and tax bands are efficiently used.
  • Deadline to pay previously unpaid Class 3 NICs for 2008/09.

6 April 2015

  • Start of the 2015/16 tax year. Ensure payroll and other systems are updated.
  • Personal allowances increased to £10,600.

7 April 2015

  • Electronic filing and payment of VAT liability for quarter ended 28 February 2015.

14 April 2015

  • Forms CT61 for quarter ended 31 March 2015.
  • Quarterly CT instalment for large companies (depending on accounting year-end).
  • EC sales list deadline for monthly paper return.

19 April 2015

  • Payment of PAYE/CIS liabilities for month ended 5 April 2015 if not paying electronically.
  • Payment for PAYE liability for quarter ended 5 April 2015 if average monthly liability is less than £1,500.
  • File monthly CIS return.

21 April 2015

  • File online monthly EC sales list.
  • Submit supplementary intrastate declarations for March 2015.

22 April 2015

  • PAYE liabilities should have cleared HMRC’s bank account.

30 April 2015

  • Companies House should have received accounts of private companies with 31 July 2014 year-end and plcs with 31 October 2014 year-end.
  • HMRC should have received Corporation Tax Self A returns for companies with accounting periods ended 30 April 2014.

If you have any questions regarding these deadlines, please contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Photo credit: freedigitalphotos.net

Nick Park analyses the Budget on BBC Radio Wales

To find out what other announcements were made in  the Chancellor’s Budget, read our Budget Summary.

Biggest Deadline Day On Record!!

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This year HMRC saw the biggest digital Self-Assessment event on record with 8.75 million of a total 10.2 million tax returns filed online by the 31st January deadline.

HMRC’s Director General of Personal Tax, Ruth Owen called it “another record-breaking year for Self-Assessment with 210,000 more people filing their returns on time than last year. We are grateful to the overwhelming majority of people who sent their returns on time. If you are one of the minority who missed the deadline, you still need to get your tax return to us as soon as possible, to avoid further penalties and interest mounting up.”

Missing the tax return deadline results in an automatic £100 late-filing penalty, with the penalty rising over time (https://www.gov.uk/self-assessment-tax-returns/penalties). People with a genuine reason for not filing should contact HMRC as soon as possible to ensure they do not incur more penalties.

Here are some (fun) facts from this year Self Assessment:

  • 42% of people left filing their returns until January, despite having their reminders in April 2014.
  • The busiest time for filing was between 1pm and 2pm on 30th January where a rate of 826 returns per minute were received, that’s nearly 14 a second!
  • Nearly 10% of all the returns due were submitted on deadline day, that’s 980,000 returns.
  • 890,000 returns were still outstanding as at midnight 31st January.

Image courtesy of 1shots at FreeDigitalPhotos.net