Do I have to file a tax return? If so, why and how?

If you are self-employed or run your own business, then the short and simple answer to the above question is: Yes, you do have to file a tax return.

Every financial year, you are required to submit a self-assessment tax return. If you do not, or even if you miss the deadline, you face being penalised and fined by HMRC.

But it’s not just the self-employed and entrepreneurs who must file tax returns. If you are employed and are a higher tax rate payer, or you earn rental income from properties, then you have to follow the code too. Again, penalties can be incurred.

So it’s safer to know exactly what you have to do, and how to do it. Submitting tax returns can be a tricky process, which is why RDG Accounting are here to lend our professional advice and help you along the way.

Who must submit a tax return?

• If you were sent a P800 from HMRC saying you did not pay enough tax last year – and you did not pay what you owe through your tax code or with a voluntary payment
• If you are self-employed, a director or business partner of a limited company
• If you are an employee, or pensioner, whose annual income is £100,000 or more
• If your income from self-employment was more than £1,000 (your trading allowance)
• If you have income from abroad that requires you to pay tax
• If your income from dividends from shares was £10,000 or more before tax
• If you need to prove you are self-employed, for example to claim tax-free childcare
• If you have pre-tax income – from savings or investments – of more than £10,000
• If you, or your partner, received income of more than £50,000 and one of you claimed child benefit
• If you received more than £2,500 from properties you rent out
• If you are a religious minister or an underwriter for Lloyd’s of London
• If you received more than £2,500 in other untaxed income (such as tips or commission)
• If your state pension was more than your personal allowance and was your only source of income
• If you were a trustee of a trust or registered pension scheme

If any of these apply to you, then it is up to you to declare this income to HMRC, who will usually require you to submit a tax return.

You’ve been told to send a return

HMRC will contact you, either by post or email, informing you to send a return.

You must fill it in and return it to HMRC by the due date – you are legally obliged to – and submit it either online or by post.

However, if your circumstances have changed and you do not need to be in self-assessment, such as you are no longer self-employed, then you still have to notify HMRC to close your account. You may have to pay a penalty if you do not tell HMRC.

Can I ask HMRC to withdraw a tax return?

Yes, you can. Even if penalties have been charged for late filing.

If you do not need to submit a tax return, for instance, because all your income is taxed under PAYE and you have no additional tax liability, you can contact HMRC and ask for the tax return to be withdrawn. If HMRC agree, you will no longer have to file a return.

If late filing penalties have been charged and you ask for a return to be withdrawn, and HMRC agree, you do not need to file the return and any penalties for missing the deadline will be cancelled.

But don’t sit on it, as you will usually have only two years from the end of the tax year for which the return is due to ask for a return to be withdrawn.

What are the deadlines for self-assessment returns?

The tax year starts on April 6 and ends the following year on April 5. You must send your tax returns and any money you owe to HMRC by the following deadlines.

• October 5: To register for self-assessment if you are self-employed or a sole trader, not self-employed or registering a partner or partnership
• October 31 (midnight): Paper tax returns
• January 31 (midnight): Online tax returns
• January 31 (midnight): Pay the tax you owe

There are also a couple of instances when the deadline is different, specifically if you are eligible for HMRC to automatically collect tax you owe from your wages or pension, then you must submit your online return by December 30.

Of if you are a trustee of a registered pension scheme, HMRC must receive a paper tax return by January 31. You cannot send it online.

What happens if I’m late sending my return?

You’ll get slightly more than a slapped wrist. If you miss the deadline for filing your tax return, or for paying your bill, then you will be liable for a penalty. The HMRC fines for late tax returns are:

• One day late – £100 for one day after the deadline
• Up to three months late – £10 for each additional day (which is capped at 90 days), on top of £100 initial fine, meaning a maximum fine of £1,000
• Six months late – It will be either £300 or five per cent of the tax due, whichever is higher, as well as the penalties listed above
• 12 months late – An additional £300 fine, or five per cent of the tax due, on top of above penalties. In the most serious cases, you may be fined 100 per cent of the tax due, which means your bill will be doubled

I need to change my return. Is that possible?

It certainly is. If, for example, you made a mistake on your tax return, you can make a change after you’ve filed it – you’ll just need to write to HMRC. Their address can be found at the gov.uk website.

Should I keep any records?

Yes. Yes. Yes. If you don’t, HMRC won’t just frown disapprovingly at you, they may charge you a penalty.

It is a legal requirement for self-assessment people to keep records, either digitally or on paper. HMRC may ask to see your records if they want to check your tax return, and if they can’t, or your records are incomplete or inaccurate, they can fine you.

It’s all a bit complicated, isn’t it?

Yes, and no. The tax return form can be daunting, and it can be tricky and time-consuming to complete, even though HMRC are encouraging people to fill returns themselves using their online system.

What may initially look like just a few boxes that need filling out can soon turn complicated, depending on your circumstances and what other extra sections need to be completed. And, of course, making sure all deadlines are met and all the correct paperwork is available.

What’s the easiest, simplest, stress-free way I can file my return?

Talk to us at RDG Accounting. We offer self-assessment tax returns for individuals and businesses, and we have in-house experts who will do it for you. We will:

• Prepare your self-assessment tax return
• Calculate your tax
• Advise you of payment dates
• Advise you of amounts due
• File your return online

That all amounts to peace of mind for you that your tax return will be completed on time, and leave you safe in the knowledge that the return is accurate.

We’ve helped many businesses successfully complete this process. Have a look at what they said, and if you’d like to talk to us further on how to file your tax return, please fill in your details below and one of the team will be in touch. Alternatively, give us a call on 0333 200 0714.