With just a couple of weeks left before the 31st of January deadline for filing Self Assessment tax returns, time’s running out to avoid trouble. HMRC’s expecting around 12 million tax returns to come in this year, but so far only 6.6 million of them have hit the taxman’s desk. For the remaining 5.4 million UK Self Assessment taxpayers, time’s running out to avoid:

  • An automatic £100 late filing penalty – even if you don’t owe a penny!
  • Daily £10 penalties stacking up to a total of £900.
  • An additional penalty of £300 or 5% of the tax owed (whichever’s more) if you’re over 6 months late – then the same again 6 months on.

There’s been some talk about HMRC being a little more lenient with people struggling during the pandemic. However, with millions of tax returns still to come in and the rules about valid excuses being deeply unclear, it’s not a smart move to depend on the taxman’s kindness. There’ll probably be a lot of people cramming the phone lines and trying to lodge appeals, too. That’s not a great recipe for a quick and easy fix if you find yourself on the wrong end of an HMRC penalty notice. Appeals are taken case-by-case, so even if you know people in similar circumstances to yours you can’t be sure you’ll get the same flexibility they did.

Another pretty big problem is that there are probably many people across the UK who don’t even realise they’re keeping the taxman waiting. Remember, if you’re self-employed, HMRC doesn’t just drop the Self Assessment rules because your income might have gone down. Even if your profits have dropped so far that you don’t owe any tax at all, you still need to file your tax return.

Equally, a lot of us have seen our employment status change as a result of the pandemic. Anyone who lost their job and started working for themselves, for instance, is suddenly in a strange new world of paperwork, profits and expenses. It’s all too easy to get tripped up in your first months of self-employment, and missing HMRC deadlines is a major danger.

It’s not just the self-employed who have to file Self Assessment returns, either. The same rules apply to people who:

  • Are partners in a business partnership.
  • Have money coming in from renting out a property.
  • Make tips or commission at work.
  • Get income from savings, investments or dividends
  • Have money coming in from abroad.

If you don’t already have all the information needed for your Self Assessment return, you need to get moving now. The general chaos surrounding the lockdown won’t be making it any easier to get hold of the necessary details, and there’s no guarantee that the deadline for filing’s going to shift from the 31st of January.

Again, HMRC’s suggested that they’re prepared to be a little flexible for people affected by COVID-19. However, you absolutely cannot afford to rely on your excuse for late filing being accepted. Here’s their basic statement:

“We want to encourage as many people as possible to file on time even if they can’t pay their tax straight away. But where a customer is unable to do so because of the impact of Covid-19 we will accept they have a reasonable excuse and cancel penalties, provided they manage to file as soon as possible after that.”

There’s not a lot of solid guidance about what specific excuses will be accepted or how you’ll be expected to prove your case. Worse still, there’s no way of appealing a fine in advance, so you’ll already be facing demands for cash before you even get to explain yourself.

The best advice, as always, is still to get your Self Assessment tax return in on time – and HMRC is strongly recommending exactly that. To make sure you stay out of trouble, it’s time to get organised, get your paperwork flowing and get in touch with RIFT. We tackle the taxman on your behalf, so you never find yourself lumbered with fines and penalties for late filing.