This Week's UK Tax Deadline Doesn't Apply To Self Assessment

by Amanda Banks, Tax-News.com, London

26 September 2005

The end of this week sees the deadline for individual UK tax returns; but people who calculate their own tax or who use accountants have until the self-assessment deadline on 31st January, 2006.

“The 30th September deadline only applies if you want the Inland Revenue to calculate your tax for you”, explains Karl Sandall, Chief Executive of national network TaxAssist Accountants. “There are no penalties to pay if you miss this deadline and no need to pay any tax by this date either. If you miss the deadline, you will need to calculate your tax yourself, or ask an accountant to do it for you”. The 30th September deadline also does not apply to on-line tax returns.

Taxpayers who have a tax bill below £2,000 and have tax collected under PAYE, can have their tax collected through their PAYE deductions in the following tax year if they submit your return by 30 December. However paper returns that are not to be filed online must be submitted by 30 September to have tax collected through the following year's PAYE deductions.

“Using an accountant who specialises in small business tax and accounting can really help to cut through the clutter and ensure that you meet all the Inland Revenue deadlines”, says Sarah Robertson, TaxAssist Accountants’ Business Development Director.

If you are preparing to complete your tax return, TaxAssist Accountants offer the following advice:

• If you are self employed, a company director or a higher rate taxpayer, you will usually be required to complete a self-assessment tax return;
• When preparing to fill in your tax form, ensure that you have all the paperwork you will need including payslips, forms P45, P60, P11D and details of benefits and expenses covered by a dispensation;
• If you are self employed and your annual turnover was over £15,000 make sure you have a complete set of business accounts. If your annual turnover was less than £15,000 you will only need to produce records of annual income and expenditure.

Small business owners have particular reason to welcome the extra time because of the crucial Arctic Systems Section 660 appeal, which will only be heard in January, although judgement will not be given until after the self-assessment deadline.

Last week, the UK's six main tax representative bodies (The Institute of Chartered Accountants in England and Wales, The Chartered Institute of Taxation, the Association of Chartered Certified Accountants, the Institute of Chartered Accountants of Scotland, the Association of Taxation Technicians and the Association of Accounting Technicians) issued an updated guidance note to help tax advisers and their clients with their tax returns for the year ended 5 April 2005. This is to assist with self assessment in the light of the decision in the Arctic Systems Limited case.

The case in question centres on Geoff and Diana Jones, who are contesting a £42,000 tax bill relating to their company, Arctic Systems. According to HM Customs and Revenue’s interpretation of the settlements legislation, the couple had sought to illegally reduce their tax bill by allocating income to the less active partner, who pays tax at a lower rate. It is said that about £1 billion in annual tax revenues depends on the outcome of the case.

Francesca Lagerberg, Chairman of the Tax Faculty of the ICAEW noted last week that: “Many small businesses, particularly those involving just a husband and wife, may still be unsure how to complete accurately their tax returns in relation to the settlements legislation. The recent High Court case involving Arctic Systems Limited has left many questions unanswered but the appeal may not have been heard in time for people to self assess for the year ended 5 April 2005, where the filing deadline is by 31 January 2006. The guidance note issued today by all the main tax representative bodies is intended to help with this dilemma.”

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