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

Pencil rubbing out tax form

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
Member

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]

Member
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!

Member
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?

Member

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.

Member
Philip Pinnegar says:
4 October 2014

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

Member
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!

Member
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.

Member
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!

Member

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.