The advent of a new year - tax, financial or calendar - is a good time to get your financial affairs in order, especially your tax affairs. Here we forewarn of the numerous compliance deadlines by looking at the taxman's calendar. Just missing one of these dates may give the taxman an excuse to investigate your affairs.
Probably the most important month for individual taxpayers who are either in receipt of untaxed income, or individuals who are liable to tax at the higher rate who aren't on PAYE. All such individuals are required to complete and submit their tax return by 31 January, including details of all income received in the 12 months ending in the preceding 5 April. Failure to submit the return by the deadline date would mean a penalty of £100. For partnerships the penalty of £100 is chargeable on each and every partner.
The end of January is also significant for a variety of other matters. First, the balance of the tax due for the preceding year is due at the end of January. Second, this is also the due date for an interim payment on account for the current tax year. Any unpaid tax attracts interest from this date. Third, an application to reduce any interim payment on account must be submitted by 31 January.
In February the Inland Revenue issues Fixed Penalty Notices where Tax Returns have not been delivered. Any appeal against the notice must be lodged within 30 days.
Any tax remaining unpaid after 28 February in respect of the preceding tax year will, in addition to the normal interest, carry a surcharge of 5%. This surcharge will also accrue interest.
The tax year ends on 5 April and various claims and reliefs must be claimed by that date.
The second interim account payment is due on 31 July. In addition, continuing failure to submit the tax return that was due on 31 January will result in an additional Fixed Penalty of £100, with the appropriate multiplier in the case of a partnership return. Finally, the balance of the unpaid tax that was due on 31 January will be liable to an additional surcharge of 5%, which will once again be liable to interest until the date of payment. Information to enable finalisation of Tax Credit awards for 2004/05, and renewing Tax Credit claims for 2005/06 must be submitted by 5 July.
The Inland Revenue will calculate the tax for the year 2004/2005 if the tax return is been submitted by 30 September.
An individual who has not been issued a tax return form and who is in receipt of taxable income must notify the Inland Revenue of his chargeability to tax by 5 October. Failure to notify is an offence and could result in a penalty.
Further deadlines must be complied with by employers who fall within the PAYE system of tax collection. The principal deadlines applicable to employers are as follows:
All tax and national insurance deducted under PAYE for the year ended on 5 April is due for payment by the following 19 April. Any tax etc, remaining unpaid will be liable to interest thereafter. Large employers (250 or more employees) have had to pay their monthly PAYE, national insurances deductions, etc electronically in full and on time from year 2004/05 onwards. Failure to do so will render the employer to a surcharge.
Every employer must by 19 May submit to the Inland Revenue an End of Year Return on form P14 for each employee for whom he was required to maintain a tax deduction working sheet, and must also by that date, submit an Annual Declaration on form P35. This declaration must be completed even if there is a nil return.
Finally, an employer must provide each of his employees with a form P60 (which is one copy of the form P14) by 31 May.
An employer is required by 6 July to:
1. Submit forms P9Ds and forms P11Ds in respect of benefits in kind provided to all higher-paid employees and every director. The employer is also required to submit details of benefits in kind provided by a third party.
2. Provide each employee with details of benefits in kind, as notified to the Inland Revenue. Most employers provide the employee with a copy of the form P11D that is filed with the Inland Revenue.
3. Provide the Inland Revenue with details of any termination payments to employees, where the payment is in excess of £30,000.
4. Provide details of all share incentive/scheme benefits awarded to staff.
Employers must notify Inland Revenue, on a quarterly basis, of any changes to benefits applicable in respect of their employees and directors.
Limited companies are also now subject to self-assessment. The deadline dates for company returns are fixed by reference to the date up to which the financial accounts are drawn. The principal dates are the following:
1. Payment of Corporation Tax is nine months and one day after the end of the accounting period.
2. A company return is due 12 months after the end of its accounting period.
3. Companies with profits at or above the upper limit for Small Companies Relief (£1.5m) are required to pay their Corporation Tax by equal quarterly instalments. The first instalment is due 14 days after the end of the sixth month of the accounting period, and the remaining three instalments at quarterly intervals thereafter.
Ashok Koshal is the Tax Partner of Newman & Partners, Chartered Accountant and Registered Auditors with offices based in the Home Counties.