The UK’s 9-year-old Tax Advice Network is offering controversial advice to anyone rushing to complete self-assessment tax return this week. Their advice: It’s better to file right and late than on time and wrong.
Chairman of the Tax Advice Network, Mark Lee, explains, ‘As the annual self-assessment tax return filing date looms so does the pressure to file your return before the deadline. But it is rarely a good idea to rush things.
If you beat the 31st January deadline but it transpires that your tax return is wrong you could be liable to a sizeable penalty. If you file a complete and correct tax return at the start of February you will only be charged £100.’
Hundreds of accountants talk of new clients asking for help in January so that they can avoid the late filing penalty. Other accountants are doing their best to complete the tax returns for long-standing clients who leave things to the last minute.
Lee continues, ‘A good accountant will do their best to help you but they are not miracle workers. It takes time to collate all relevant data, check for inconsistencies, clarify issues and complete a tax return so as to keep tax bills to the legal minimum.’
If HMRC considers you were careless they will charge a penalty of up to 30 per cent of the extra tax even when a tax return is filed ahead of the 31 January deadline. The penalty can be up to 70 per cent of the tax at stake if HMRC determines that you have deliberately underestimated your tax. Much better therefore to pay the £100 and to take the extra time to ensure that your tax return is correct when you file it a little late.
Separate to these fines is the interest that HMRC charges on late paid tax. Lee advises, ‘Pay an estimate of the tax you will owe before 31st January. This will reduce the interest you will pay on any late paid tax. You can do this even if your tax return is not ready to file by the deadline.’
If you need help to prepare or finalise your tax return; or if you want advice on what you can do to reduce your tax bill, use the Tax Advice Network website to find a local tax specialist or accountant to help you. You may even find someone who will help you beat the deadline!
Further reading on tax returns
