You may already have received a tax return for 2004/05. If you do not receive a return you have no obligation to complete one. However, if you are not sent one but you had untaxed income or taxable capital gains in the year, you have an obligation to notify the Revenue of that fact by 5 October. The Revenue will then decide whether or not to issue you with a return.
You don't have to attempt to calculate the tax if you either submit the return by 30 September or file electronically via the internet; the Revenue will work it out for you.
The timetable tends to stay the same. For the 2004/05 tax return:
|31 January 2005||Due date for first interim payment (half of last year's tax liability)|
|31 July 2005||Due date for the second interim payment (another half)|
|31 January 2006|
|Also due date for payment of the balance of the tax|
|28 February 2006||A 5% surcharge will arise on unpaid tax|
|31 July 2006||A second 5% surcharge will arise on any tax still unpaid|
|Also second £100 penalty for late return|
|31 January 2007||If the return is still outstanding, a penalty equal to up to 100% of the tax will be imposed|
The fixed penalties cannot exceed the tax due at 31 January following the end of the tax year. So paying the whole of the balance of the tax before then will reduce the penalty to nil even if the return is not filed until later. If there is only one unresolved query on your return at the filing date it is probably best to work out the tax that would be owed if that query was ultimately resolved in the Revenue's favour and pay.
If you have a reasonable excuse for missing the deadline and file as promptly as possible, you may avoid a penalty or surcharge. Circumstances which the Revenue deem to be reasonable excuses are outlined in booklets SA/BK6 for penalties and SA/BK7 for surcharges.
Payment of the tax
The onus is on you to pay the tax owed by the due date without waiting for a reminder. The Revenue tends to send out payslips and reminders about a month before the tax falls due. If you need to pay, but you haven't received a payslip, you can send the payment to the Inland Revenue Accounts Office either at Shipley or Cumbernauld. You will need to quote your unique tax reference number and specify which tax year the payment relates to.
The return form
The self-assessment tax return form consists of a 10-page form plus up to nine supplementary pages. Everyone who is asked to complete a return needs to fill in the basic form plus whichever of the supplementary pages are relevant.
If you don't want to use the paper version, you can complete the form over the Internet. You first have to register on-ine with the Revenue. They will then send you a reference number by post. Only when you have this will you be allowed into the tax return area of the site.
For the most part the return form is easy enough to follow. However, there are a few points to watch.
The boxes for RAPs and PPs (retirement annuity and personal pension contributions) on page 5 are a little confusing as they are intended to deal with two separate things. For example, RAPs have four boxes: payments in the year (14.1); the part of such payments used in an earlier year (14.2); the part of such payment that you wish to carry back to an earlier year, but for which a claim has not yet been made (14.3); and payments in the next year that are to be carried back (14.4). Boxes 14.1, 14.2 and 14.3 are netted off to give the total for which relief is being claimed in the year concerned. The figure in box 14.4 has nothing to do with the tax liability for the year.
The tax calculation appears in Question 18 on page 7. The tax due (box 18.3) is the amount before deducting the interim payments, not the amount that is actually due to be paid on 31 January. Box 18.6 is the claim to reduce the interim payments for the following year. If you have not decided whether to reduce the payments at the point when you are completing the form, this box can be left blank and a claim subsequently made by letter.
Box 23.1 on page 9 asks whether any underpayment is to be collected by adjustment to your PAYE coding. This spreads the underpayment over the following year - ie, a 2004/05 underpayment will be collected in the 2006/07 notice of coding, and is therefore attractive. However, in general the Revenue is prepared to collect the tax in this way only if both the underpayment is below £1,000 and your tax return is submitted by 30 September.
Box 23.2 asks whether the return includes provisional figures. A distinction needs to be made between provisional figures and estimates. A provisional figure is an estimated figure that will be replaced by a corrected figure at a later date. An estimate is a final figure where the exact amount is unascertainable. The box is concerned only with provisional figures.
Next is a box for additional information - often called the "white space". Volunteering additional information is likely to minimise the risk of an inquiry into the return. If you have any entries that might raise questions, it is a good idea to explain them here.
John Hiddleston is a senior tax consultant at Chiltern Plc