Self Assessment – What You Need To Know About Personal Tax

At McDade Roberts we offer services for businesses but also wealth services for individuals. One of these services is looking after individual's personal tax self assessments. Under the self-assessment regime an individual is responsible for ensuring that their tax liability is calculated and any tax owing is paid on time. We aim to make this process as straight forward for our clients as possible. Read on to find out a little more about the self assessment process.

The Self Assessment Cycle

Tax returns are issued shortly after the end of the fiscal year. The fiscal year runs from 6 April to the following 5 April, for example, 2018/19 runs from 6 April 2018 to 5 April 2019. Tax returns are issued to all those whom HMRC are aware need a return including all those who are self employed or company directors. Those individuals who complete returns online are sent a notice advising them that a tax return is due.

A taxpayer has normally been required to file his tax return by 31 January following the end of the fiscal year. The 2018/19 return must be filed by 31 October 2019 if submitted in 'paper' format. Returns submitted after this date must be filed online, otherwise penalties will apply.

Self Assessment Penalties

Late filing penalties apply for personal tax returns as follows:

  • £100 penalty immediately after the due date for filing (even if there is no tax to pay or the tax due has already been paid)

Additional penalties can also be charged:

  • over 3 months late – a £10 daily penalty up to a maximum of £900
  • over 6 months late – an additional £300 or 5% of the tax due if higher
  • over 12 months late – a further £300 or a further 5% of the tax due if higher. In particularly serious cases there is a penalty of up to 100% of the tax due.

Calculating the Tax Liability and 'Coding Out' an Underpayment

The taxpayer does have the option to ask HMRC to compute their tax liability in advance of the tax being due in which case the return must be completed and filed by 31 October following the fiscal year. This is also the statutory deadline for making a return where you require HMRC to collect any underpayment of tax through your tax code, known as 'coding out'. Whether you or HMRC calculate the tax liability there will be only one assessment covering all your tax liabilities for the tax year.

Changes to the Tax Return

HMRC may correct a self assessment within nine months of the return being filed in order to correct any obvious errors or mistakes in the return.

An individual may, by notice to HMRC, amend their self assessment at any time within 12 months of the filing date.

Self Assessment Enquiries

HMRC may enquire into any return by giving written notice. In most cases the time limit for HMRC is within 12 months following the filing date.

If HMRC does not enquire into a return, it will be final and conclusive unless the taxpayer makes an overpayment relief claim or HMRC makes a discovery.

It should be emphasised that HMRC cannot query any entry on a tax return without starting an enquiry. The main purpose of an enquiry is to identify any errors or omissions from a tax return which result in an understatement of tax due. The opening of an enquiry does not mean that a return is incorrect however.

At McDade Roberts we offer an insurance scheme for tax enquiries.

Checklist Of Records Required For HMRC Enquiry

Employees and Directors

  • Details of payments made for business expenses (eg receipts, credit card statements)
  • Share options awarded or exercised
  • Deductions and reliefs

Documents you have signed or which have been provided to you by someone else:

  • Interest and dividends
  • Tax deduction certificates
  • Dividend vouchers
  • Gift aid payments
  • Personal pension plan certificates.

Personal financial records which support any claims based on amounts paid eg certificates of interest paid.

Business

  • Invoices, bank statements and paying-in slips
  • Invoices for purchases and other expenses
  • Details of personal drawings from cash and bank receipts

How McDade Roberts Can Help

We help hundreds of individuals complete their annual self assessment tax return. We can prepare your tax return on your behalf and advise on the appropriate tax payments to make.

If there is an enquiry into your tax return, we will assist you in answering any queries HMRC may have. Please do contact us for help.