This guide will walk you through the critical points and help you prepare for the impending deadline with a strategy to mitigate penalties and safeguard against HMRC inquiries.
(Read Time: Approx. 5 minutes)
Topics Discussed:
- The deadline for online tax return submissions, and the distinctions of submitting an online tax return
- The implications and penalties for those who submit late, and specifics of filling in the forms.
Deadline Dynamics and Penalties
For the fiscal year 2022-23, the deadline for online tax return submissions is on 31st January 2024.
Mark this date in your calendars to avoid the late filing penalties.
A slip beyond this deadline triggers an immediate £100 fine for returns delayed by up to three months.
The longer the delay, the heftier the fine, compounded by accruing interest on any overdue tax bills.
It’s not just about the money; a late submission broadens the scope for HMRC’s scrutiny, extending the window of inquiries into your financial affairs.
If you find yourself on the back foot, HMRC provides tools to estimate your penalty for Self-Assessment tax returns and late payments that are more than three months overdue.
In case of a valid impediment, you have the right to contest the penalty.
A ‘reasonable excuse’ may persuade HMRC to absolve you of the fine, but this requires prompt and clear communication of your circumstances.
Examples of what HMRC considers a reasonable excuse include:
- your partner or another close relative died shortly before the tax return or payment deadline
- you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
- you had a serious or life-threatening illness
- a fire, flood or theft prevented you from completing your tax return
- postal delays that you could not have predicted
For the full list of these reasonable excuses, read HMRC’s documentation on appealing.
Unique Taxpayer Reference (UTR) Requirement
Online tax filing without a UTR is like trying to start a car without a key – it’s essential.
Registering for a UTR is the first step, and with processing times taking up to 10 working days, it’s prudent to request this well in advance of the deadline.
You would have been given an UTR when you registered for Self-Assessment, or when you started a Limited company.
Find your original documents, or you can check your personal tax account, as well as your HMRC app, within your personal details.
Additionally, if you have submitted in previous years, you will find your UTR on these documents, as well as related ones, such as notices to file a tax return.
Online Filing Exceptions
Despite the digital age, some taxpayers will encounter roadblocks due to software specification issues from HMRC.
Lists of online filing exclusions have been released, covering various taxpayer categories.
Should you miss the paper filing cut-off on 31st October, 2023, accompany your return with a Reasonable excuse appeal form to sidestep late penalties.
It’s a crucial step, as paper returns must bear your actual signature to be considered valid.
Navigating Provisional Figures and Detailed Disclosures
Provisional Vs. Estimated Figures: Simplified
When finalising your tax returns, you’ll encounter two types of temporary numbers: provisional and estimated figures.
Provisional figures are placeholders, your promise to update HMRC with the actual numbers as soon as they’re available.
Conversely, estimated figures are used when it’s impossible to provide a more accurate number, and you don’t intend to amend it later.
The key difference? Intent to update.
When to Use Provisional Figures
Use provisional figures when certain details can’t be finalised within the Self-assessment time limit.
Mark Box 20 of Page TR8 and provide a clear explanation, including when you expect to update these figures.
HMRC might enquire further into these provisional numbers, so be prepared to justify your estimates.
Reporting Requirements and Updating HMRC
For provisional figures, detail your reasoning and anticipated finalisation timeline in the white space provided.
For estimated figures, explain your rationale but leave Box 20 unmarked.
Remember, the standard window for updating provisional figures is 12 months from the filing date. Delays can lead to penalties.
Adjustments for Personal Consumption and Home Office
Personal use adjustments are a must for the self-employed, especially when it comes to vehicle use and property.
Accurate reporting is the bulwark against tax penalties. As for home office expenses, you’re entitled to claim a proportionate share of the costs of running your home.
However, the method of apportionment is variable, depending on the nature of work carried out at home.
Alternatively, a fixed monthly rate based on hours worked from home may suffice, though actual expenses could yield a more substantial tax relief.
Capital Gains Tax (CGT) Considerations
Residential property gains sit in the higher echelons of CGT, taxed at 18% and 28%.
The Business Asset Disposal Relief has seen adjustments, and the current lifetime allowance is set at £1 million.
Timing is crucial – the date of disposal often precedes the completion date and getting this wrong could mean reporting gains in the wrong tax year.
Review and Amend Previous Tax Years
31st January serves as a checkpoint for more than just the present year’s taxes. It’s also the deadline to claim reliefs from previous years.
For instance, trading losses from 2021-22 must be claimed by January 2024. Amendments to last year’s return must also be completed by this date.
It’s an opportunity to fine-tune your tax affairs, ensuring that provisional figures previously submitted reflect your current financial realities.
Summary
Whether using provisional, estimated, or final figures, clarity and timeliness are crucial.
Document each step in your tax return and be ready to update HMRC with the final figures.
Integrating these sections into your broader tax strategy will help streamline the process and ensure compliance.
And remember, the final deadline for your 23 self-assessment accounts is 31st January 2024.
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Ilyas Patel