Self Assessment Tax Returns post 31 October 2008

Monday 10 November 2008

What will HM Revenue and Customs (HMRC) do if you didn't file your paper self assessment income tax return by 31 October?

What will happen if you have not filed a paper tax return by 31 October 2008?

A paper tax return can still be filed after the 31 October paper filing date, but without a valid claim for reasonable excuse, as detailed below, you are likely to incur a fixed penalty which will be the lower of £100, or the tax outstanding at 31 January 2009.

If individuals and trusts pay their tax before 31 January 2009, they should not be subject to the penalty, although penalty notices will probably be issued automatically and taxpayers or their advisers would need to contact HMRC to lodge an appeal. However, this method of reducing the penalty to nil has been the subject of a recent consultation into taxpayer filing behaviour and may not be available in future years.

Late partnership tax returns will attract a penalty of up to £100 per partner.

In addition, HMRC will look at the paper returns they have received by 31 October and will pre-register Self Assessment individuals who have not filed a paper return and who do not have an agent, or who have not registered on-line themselves. HMRC is assuming these people will be filing online, and, in an effort to speed up the process, will automatically send a User ID and Activation PIN in the post to those individuals. This could come as quite a surprise! Individuals need to logon to the HMRC website using their User ID and Activation PIN within 28 days otherwise the Pin will become invalid. Individuals would then need to contact HMRC for another Activation PIN if they want to file on-line.

How can a penalty be avoided?

If you cannot file a tax return online and have a reasonable excuse, you can file the return on paper together with a Reasonable Excuse claim form. If received well in advance of the January deadline, and HMRC agrees the claim, it will suppress the issue of a penalty.

Use of the claim form (which should be attached to the front of any paper return which is sent to HMRC after 31 October) is strongly recommended as this will alert the person logging the receipt of the return at HMRC. It is understood that the claim will then be reviewed promptly by a special group of officers who will be specifically trained to deal with e-filing problems leading to a late submission.

We would emphasise that this process will only  work if a 'reasonable excuse' exists, and it is understood that HMRC will be quite strict about what is covered.

What is considered a reasonable excuse?

HMRC has confirmed that a reasonable excuse will include certain software failures, returns not covered by HMRC's own software and returns with the following supplementary pages:

• SA102 MP Members of Parliament
  
  
• SA102MLA Northern Ireland Legislative Assembly Member
  
  
• SA102MSP Member of Scottish Parliament
  
  
• SA102WAM Member of Assembly for Wales

There are also a number of scenarios where certain entries or combinations of entries on the return cannot be processed by HMRC online. These mainly include those returns with foreign pages and pages for ministers of religion.

Sheena Hay, Senior Tax Manager at Grant Thornton says: "This year there have been substantial changes for Self Assessment, including the introduction of the 31 October paper filing deadline, the ongoing 31 January deadline for online filing, and significant changes to the actual tax return forms. It can therefore be difficult for taxpayers to know what their options are or how best to deal with their tax affairs. It is always worth seeking further advice if taxpayers are uncertain or experiencing difficulties with their tax return as early as possible."

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