January 31 2012 is the deadline for individuals to file their tax returns for the year ended 5 April 2011. It’s already too late to file tax returns on paper, so this can now only be completed online and, if the deadline is missed, penalties will be charged.
If you haven’t yet done anything, here are some tips for avoiding unnecessary penalties and charges.
If you have not registered for online filing, do so now. HM Revenue and Customs will need to post you your login details which can take up to a week to arrive. So registering now should mean that you will only just be able to complete your tax return in time.
Check now that you have all the information to complete your tax return. If you need to ask an employer for details of last year’s earnings (form P60) or benefits (form P11D) or you need to ask the bank for details of interest earned in the year, this may take a few days. Don?t leave it to the last minute or you won’t be able to complete your return in time.
Take professional advice if you’ve had anything complex in the year; penalties can be due if you complete your tax return incorrectly. Some examples of complexity may include shares or share options from your employer, anything sold which may give you a capital gain or loss or if you have received income from overseas which could qualify for a lower tax rate.
Make sure you claim all the reliefs you’re entitled to. For example, pension contributions, gift aid payments to charity throughout the year and tax efficient investments such as VCT or EIS. Also make sure that you have claimed loss relief where you have lost money, in some cases income tax relief may be available for losses on shares.
Take care when entering information to complete your tax return online. A simple transposition error could lead to a significant difference in tax liability for which you could face large penalties.
It is more important this year that tax returns are submitted on time. A new penalty regime now applies and tax returns only one day late will attract a £100 penalty. Leave it six months and the penalty will be at least £1,300 plus a percentage of the tax due!
Gary Heynesis a tax partner at Baker Tilly.