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Self-assessment tax returns: what are you worried about?

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Pencil rubbing out tax form
Profile photo of Harry Cheesman Harry Cheesman Which? Money
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Are you planning to file a self-assessment tax return this year? If so, we want to hear from you. Don’t end up like the reader who was fined £1,600 for a late tax return, even though he didn’t owe any tax…

We’re looking to answer your burning tax return questions, which we’ll be featuring in an upcoming issue of our Which? Money magazine. We’re focussing on your self-assessment tax returns, so capital gains tax and inheritance tax are off the table for now.

A record high of 10.7 million people were required to file tax returns in January – 1.4 million more than 2007. So, filing a tax return is a task that’s affected more people than ever.

With the paper deadline fast approaching (it’s 31 October by the way), you may be thinking of making this year’s submission smoother than the last. And we want to help you avoid making costly errors.

Avoid tax return fines

For example, if you miss the deadline you’ll incur a fine of £100. If you still haven’t submitted it three months after this date, you’ll be looking at a daily fine of £10, up to a 90 day maximum of £900 (in addition to the fixed penalty). There are also big penalties for inaccuracies in your tax return, so it’s important to get things right if you want to avoid the taxman’s wrath.

I thought I’d share a nightmare example with you to ‘inspire’ you to share your own stories. One Which? member contacted us to say he’d been fined £1,600 for a late tax return – even though he didn’t actually owe any tax. This is because HMRC requires tax returns from all taxpayers within certain categories – for example self-employed sole traders – regardless of earnings.

You might be wondering how he was fined £1,600, when the above fines seem to suggest a maximum of £1,000? Well, if you haven’t submitted your tax return after six months you’ll be fined £300 or 5% of the tax due (whichever is higher). And after 12 months, you could be hit by the same again.

Your tax return questions

Hopefully you can’t top a £1,600 fine for a late tax return, but if you have any similar examples, please share them with us.

Now to your questions. If you’re a dab hand at tax returns, what would you have liked to have known when you started out? And if you’ve never completed one before, what worries do you have?

Comments
17
Lee Beaumont says:
2 October 2014

I did my first self-assessment tax return in 2008 and made a right mess of it. I like to think I’m pretty smart when stuff like that, but nope, it confused me like mad. Luckily I didn’t get a fine, i was just told to-do it again.

Since then I have had an accountant. I have been using him 4 years and it’s perfect. He looks after everything to-do with HMRC so i don’t need to worry about it anymore.

It’s all well and good doing it yourself to save money. But as I own a few companies, a charity, plus income from all over the pace it’s always best to just pay an accountant and make sure I’m 100% legal.

[Hi Lee, afraid we had to remove the link to align with our community guidelines. Thanks, mods]

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John says:
2 October 2014

Your mention of HMRC fining someone who didn’t owe any tax reminded me of a conversation with my accountant a couple of years back after I got a demand for payment as I hadn’t paid all my tax. The shortfall was for £0.01. The cost of sending the letter probably far outstripped the lost revenue.

My accountant however told me the previous year another of his clients had received a demand for unpaid tax of £0.00. Neither the client nor the accountant was able to get anyone in the tax office to accept the bill had been sent in error. The matter was eventually solved when the accountant told the client to send HMRC a cheque for £0.00 to clear the debt which seemed to do the trick as they heard no more about it!

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Gerard Phelan says:
4 October 2014

What REALLY annoyed me with last year on-line ‘s Self Assessment was the question about my Pension income – there wasn’t one! I discovered that in order to see the form on which I would enter my private pension income, I needed to enter a non-zero value for for the State Pension, which I do not receive because I am too young. Thus I was forced into claiming that I received a State Pension of £1 AND pay tax on it. I thought of reducing my investment income by £1 to balance out, but it would be just my luck if there was an audit check and the totals did not balance.
It is time I started this year’s self-assessment. I am wondering if this bug – which I reported in the on-line comments and questionnaire sections will have been fixed?

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rarrar says:
4 October 2014

I had this exact same issue for 2013/4 return, as well as a couple of other navigation quirks, but got around it by selecting the relevant pension page from the “index” at the beginning of my Tax return rather than following the next button navigation.
Glad to hear it wasnt just me.

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Philip Pinnegar says:
4 October 2014

No problems, it took me less than 30 mins to complete.

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Mark says:
4 October 2014

Filling in the self assessment is easy until you get to pension contributions.Claiming the extra tax relief if you are a higher rate tax payer is not very easy.The process is not explained well.I wonder how many people just don’t claim this back?
Better clarity please HMRC!

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Graeme says:
4 October 2014

My wife filed her on-line self assessment return in November 2013, over 2 months before the 31 January 2014 deadline. She immediately paid the tax demanded. However in June 2014 she received a letter demanding a further £300 approx. due to an error on HMRC’s part concerning an underpayment in a previous year.
My wife phoned HMRC for an explanation and the advisor apologised for the lateness of the letter and explained that they were running months behind schedule. Being satisfied with the explanation she immediately made the requested payment via her on-line HMRC account. On examining the printed receipt she noticed that there was included an interest charge as the payment was due on 31 January, 5 months before she was notified about it.
I suspect that thousands of people may have been caught in this way but that many will not have noticed.

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Diana says:
5 October 2014

If HMRC were 5 months late in notifying your wife that she owed tax, can she not demand a penalty from them on the same basis that they demand penalties from the taxpayer? If taxpayers could do that, I’m sure HMRC would soon get its act together!

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banjo says:
4 October 2014

I’ve had to fill in a tax return every year since I left school in 1970. I know people who have NEVER had a tax return of any type ever. I hate people like that…

I make a point of returning them within a few weeks of the April start date so I get my refund nice and quickly. When Which! first introduced their TaxCalc tax return software I started using that and have kept using it throughout the many changes in manufacturer.

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Steve GS says:
5 October 2014

I’ve filed tax returns online for about 12 years; initially when I was self-employed and latterly now I’m retired. I also filed my mother’s returns when I took on power of attorney 8 years ago: since she passed away, I have filed the last two as an executor.

I always work things out in Excel first – it isn’t that difficult since the tax thresholds, personal allowances, etc. are well publicised either by HMRC or third party websites such as moneysupermarket.com.

Everything has been fine with one exception (below) – if there has been any discrepancy between my Excel workings and HMRC’s online version, it has been small and always in my favour, so I just let it ride.

The only problem has been with my mother’s last tax return, ie. the tax year in which she died. There were two ‘chargeable events’ (CEs) relating to bonds payable on her death, both of which had been running for over 30 years. HMRC’s website says you can’t file a tax return online when there are multiple CEs, but the ‘manual’ version of the tax form (SA100) they sent me had no means of declaring these. HMRC’s robot-based telephone system was hopeless – I eventually spoke to someone who told me I should do it online anyhow, so I did. To cover the CEs, I scanned both certificates and uploaded them with a covering letter giving as much detail as possible. This was a month ago and I’ve heard nothing since. There are only two outstanding items on my mother’s estate – how much tax she owed for 2013/14 and the final solicitors’ bill. I can’t wind up the estate until HMRC responds.

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Rachel Jones says:
23 January 2015

Complete nightmare. I’m in my second year as a childminder. Never earn enough to pay tax and I’ve been on maternity leave in those two years. I’ve spend 30mins on hold, 45mins on hold just to gain access to the online forms and now I can’t put 0.00 in the online form for some boxes.
I have to put a value in losses, in allowances, expenses etc etc…which has a knock on effect for other fields. This process should be incredibly simple but I’m having to put in values of a pound instead of zero to get through to the next section. I’m incredibly frustrated and anxious that the information I’m submitting is incorrect because of their rubbish website!

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Dave says:
28 January 2015

Can I just say that the HMRC self-assessment website is incredibly poorly designed and unnecessarily difficult.
There adverts of “tax doesn’t need to be taxing” and showing it as some kind of serene experience are absolute jokes. Why don’t they stop spending money on adverts that make out it is an easy process and actually fix the issue.

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Mick Collyer says:
17 December 2015

Tried to register to do my tax return online found it to difficult just to register ,loads of peopleI have spoken to say the same. First had to get a gateway number ,done that then started to try and fill in my details and one of the first questions was “who is your client” now what does that mean . Gave up and paid an accountant in the end, cost me £250 . Why can’t they make it simple .

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Chris M says:
18 December 2015

I had to battle to get them to send me a paper tax return this year, hanging on the phone for ages, and even when I got through I did not get sent all the right forms first time. After reading the above comments I am very glad I insisted on sticking to paper returns but HMRC are making it as difficlt as they can to do this. I do make sure I get them sent in by end August so there is plenty of time for any queries. Then it is their responsibility to tell me what I owe.

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John says:
10 September 2016

I have a dormant company i’m trying to close but need to do 1 more return for a period where i didn’t use the company at all, no money came through the company… the return was going well until i entered 0’s in the balance section and it doesn’t seem to like it.. I dont understand what to enter when there are no figures to put in. Does anyone have any knowledge of this?
Thanks in Advance

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Catherine says:
5 October 2016

Further to the conversation about late payment fines, be very careful if you pay by BACS. There are separate account numbers for different centres and it’s easy to get them mixed up. I paid by BACS a couple of years ago, in plenty of time, but unfortunately sent it to the wrong HMRC account. The payment went out of my account and I thought all was well, until some time later I got a hefty late payment fine. I wrote to them, once I’d worked out what I’d done wrong, with proof that they did get the money albeit in the wrong account, but it took HMRC many months and lot of badgering by me to acknowledge this and by that time I had paid £500 in fines. Eventually they credited my account with the original payment, although I’d had to pay my tax again in the meantime to stop the late payment fines and interest. An expensive mistake, so I always pay on the HMRC website now to make sure there are no slip ups.

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Poppy says:
7 January 2017

To avoid making a hash out of the self assessment form (there were some interest issues I found hard to complete), I had a tax accountant complete it for me. He misread documentation and I am still receiving penalty fines and interest demands from HMRC despite the accountant admitting liability in writing to me and assuring me he would pay this as it was his fault, not mine. Is there a governing body I can report him to? Thanks in advance.

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