Accountant

The Self-Assessment Tax Return Deadline and Errors – A Big Headache

tax return mistakes

There are just over three weeks to go to the deadline for filing the annual Self-Assessment tax return and paying any tax due. Six million people still need to submit their Self Assessment Tax Return before the 31 January deadline according to HMRC. It is the last-minute rush, apparently, that makes some taxpayers error-prone; so what errors are these?

HMRC’s online filing facility, which eases the process with automatic calculations and on-screen assistance, has not erased the human-error issue entirely. Making errors on your SA tax return can hold things up (with potential for a penalty) and can prompt HMRC to look more closely at you. There are penalties for not submitting your tax return on time and fines that accumulate over time until the tax due is paid. If HMRC suspect that the error is down to lack of care or, worse, deliberate evasion, investigation, fines, and even prosecution may follow.

Missing the deadline:

The deadline for filing SA online, and for paying of any tax due, is 31 January. If you intended filing a paper tax return you have missed the deadline and if you filed a paper return by the 31 October deadline, but forgot to sign and date it, then it is void, and HMRC has probably already informed you.

Incorrect tax-year dates:

Although the SA tax return is filed on 31 January 2016, the figures to be filed are for the previous tax year. For the 31 January 2016 deadline, you are submitting income and expenditure running 6 April 2014‒5 April 2015.

Failing to submit the return:

Make sure you press the “submit” button when your online SA tax return is ready; honest, this is something some taxpayers forget to do!

Ticking the wrong box:

Use the HMRC step-by-step guide to filling out your SA tax return to avoid ticking the wrong boxes or entering the wrong information in the designated place.

Incomplete tax return:

All necessary pages of your SA tax return must be completed. PAYE information, for example, is often left out, but this must be filled in if you have earned money through PAYE.

Income/Capital Gain:

Income includes everything you earn: including interest received from a bank, building society or other savings accounts (with the exception of ISAs). A PPI compensation payout must be declared along with any interest included in the payment. You must also declare dividends from UK companies, open-ended investment companies and investment trusts.

There are penalties for failing to declare all relevant income and Capital Gains. The types of income/Capital Gain you must declare are:

  • Income from employment
  • Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance
  • Pension income
  • Interest, dividends from savings, bank accounts, building societies investments, or Trusts
  • Property income
  • Foreign income including evidence of tax already paid abroad
  • Capital Gain
  • Employee share schemes
  • Dividends

Some items can be excluded from your Tax Return income:

  • Interest, dividends or bonuses from tax exempt investments (for example, ISAs and National Savings & Investments Savings Certificates)
  • Interest and terminal bonuses from Save As You Earn schemes
  • Premium Bond, National Lottery and gambling prize winnings
  • Interest awarded by a UK court as part of an award of damages for personal injury or death

Supplementary pages:

For “additional income” not covered by the main tax return, you must include supplementary pages, which may include:

  • Interest from gilt edged and other UK securities, deeply discounted securities and accrued income profits
  • Life insurance gains
  • Stock dividends, non-qualifying distributions, or close company loans written-off
  • Post-cessation receipts
  • Income from share schemes
  • Lump sums or compensation payments from your employer, or foreign earnings not taxable in the UK
  • Taxable lump sums from overseas pension schemes
  • Certain employment deductions
  • A claim to age-related Married Couple’s Allowance
  • Other tax reliefs not found in the main part of your tax return
  • Loss relief claims
  • Income from property

NOTE: Among all of the “additional income” listed above, income from property is an area on which the tax authorities are focusing. NOTE as well that writing “info to follow” or “as per accounts” instead of providing the figures will not suffice, you must include all the information and submit everything together. Remember that if you are suspected of omitting information on purpose, you could be investigated, fined, or even prosecuted.

Incorrect figures:

Double check any calculations to ensure you pay the correct amount of tax. Any deliberate wrongdoing can result in prosecution.

Gross and net:

Mixing up gross and net is a common error. The gross amount is the amount before expenses, and the net amount is the amount after all deductions have been made, so double check your figures before you enter them.

Proper record keeping:

Keep records of all relevant expenditure and income, and keep these for a minimum of six years.

  • P60, P45, and P11D
  • Expense records
  • Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance
  • Pension records
  • Bank statements
  • Property income
  • Foreign income including evidence of tax already paid abroad
  • Capital Gains
  • Employee share schemes
  • Student loan payments

Self-employed taxpayers must maintain business records and keep them for a minimum of six years.

  • Cash books
  • Invoices
  • Mileage records
  • Receipts
  • Bank statements
  • Records of all sales and takings, purchases and expenses
  • Money taken out of business for personal use
  • Personal money put in to the business

Change of name or address or change to bank details:

Misspelt names can void your SA tax return. For example, you must inform HMRC if you have recently changed your name by marriage; or if your address changes, which you can do online by filling out a P85. If your bank account details have changed over the past tax year remember to change it on your tax return.

Incorrect NI Number and Unique Tax Reference (UTR):

Check that both your UTR reference and NI number are correct and that both are included on your SA tax return, as they are unique to you and identify you. The UTR is a 10-digit reference number that is found on correspondence from HMRC; your NI number, which is two letters, six numbers, and then a final letter, is best committed to memory. It should appear on any correspondence from the tax office or on a payslip.

Correct tax code:

Check that you are on the right tax code, as thousands of taxpayers pay too much (or too little) tax because they are not. Your tax code can be found on your pay slip or P60, and is normally three digits followed by a letter.

Expenses:

Please go to the DNS website to see all the information provided about expenses, what you can claim and why it’s important to be disciplined about what you claim and how you pay for it. Generally, if expenses are related exclusively to the running of your business you can claim them against your income, but expenses that are not exclusively for business – i.e. a home office, phone and broadband, car/mileage, for example, you can only claim a percentage of the usage.

Forgetting to pay what you owe

Remember, you must pay any tax due on or before the deadline of 31 January or you will be fined £100 automatically and penalised daily until the debt is paid. If you are unable to pay your tax on time then you must phone HMRC and ask for “time to pay”. Visit the DNS website to read more about HMRC’s penalty regime.

Spotting an error on your tax return:

If you realise you made a mistake on your SA tax return, you have 12 months from the submission deadline to correct it; this is known as an “amendment”.

Avoid error and stress and save taxes:

We will help you avoid errors on your SA tax return, cut out the stress, and reduce your tax bill compliantly. If you have several sources of income, it can’t be over-stated how important it is that your tax affairs are properly managed. Although it’s last minute, if you or anyone you know are in any doubt about how to fill in your tax return, don’t ignore it, don’t delay, call DNS today or contact the HMRC’s Self Assessment Helpline.

About the Author:

Sumit Agarwal
, A specialist accountant and tax adviser for freelancers, contractors and small businesses since 2005, He is an expert in business growth and development strategies. A renowned tax expert for owner managed businesses and contractors, He won the British Business Forum’s Young Entrepreneur Award in September 2012, presented at the House of Commons by MP Vrinder Sharma.