Self Assessment – Don’t be an ostrich!

Business owner, self-employed or company director?

Then don’t forget that the deadline for submitting your Self-Assessment return is just around the corner. Paper returns for the year to April 5th 2018 are due later this month. Online returns are due by the January 31st 2019, and any tax due needs to paid by this date as well.

Remember, when it comes to Self-Assessment (and indeed tax in general) it is safer to be a squirrel than an ostrich, and ideally you should be forecasting your liabilities and putting aside some of the cash you collect as you go along so you can safely settle when they become due.

Unfortunately, as we all know, this is often easier said than done.

Tax liabilities are notoriously difficult to forecast (which is why we normally suggest getting in returns early to remove uncertainty).  And, in any interim period, it’s always a temptation to rob Peter to pay Paul if all of a sudden you find yourself short of cash for whatever reason.

However, time and time again, not playing it safe has proven itself to be a mistake.

So, if the above gives you cause for concern let us help. We can both help you to complete this year’s Self-Assessment return and correctly provide for any tax bills going forward, starting with the answers to the questions you may have right now.

Do I need to submit a Self-Assessment tax return?

You will need to submit a Self-Assessment return if in the last tax year:

  • You were self-employed and earned an income from self-employment of more than £1,000.
  • You were a company director (other than non-remunerated directors of non-profit organisations)

This is not an exhaustive list.

Further information on who needs to submit a Self-Assessment Return can be found here.

What happens if I don’t submit my return on time?

You’ll be fined £100 if your tax return is up to 3 months late.

You’ll have to pay more if you submit your return after this and the amount can rise quickly.

See HMRC’s online penalty estimator.

[Interesting fact: the Guardian reported that 750,000 people failed to file their 2017 Self-Assessment returns on time – that’s a staggering £75,000,000 of penalties!]

What happens if I don’t pay on time?

You’ll have to pay a penalty of 5% of the tax due if your payment is 30 days late.

Again, after this you will have to pay more and the amounts can rise quickly.

Interest is also payable.

See HMRC’s online penalty estimator.

What should I do if I am going to be unable to pay on time?

Recently, HMRC has made an effort to treat tax payers (its customers) more sympathetically.

If you know that you are going to be unable to pay on time, its website recommends you contact them as soon as possible and suggests it may be possible to arrange a payment plan.

This is certainly good advice.

However, we would always recommend that if you find yourself in this situation you speak to your accountant, as it remains all too easy to get in a tangle with HMRC.

Need some help? Email us here at [email protected]