Deadline approached for UK tax returns

UK taxpayers who want to file their returns online need to register by today (Friday January 21) to receive their user and activation code in time for the end of the month deadline. HM Revenue & Customs (HMRC) said it takes seven working days for the user identification and codes to be sent by post and returns must be filed by 31 January and those failing to do so face a £100 late filing penalty.

HMRC is also reminding people who have filed online before to make sure that they have their user ID and password and not to leave it to the last minute to check.

It comes as the Institute of Chartered Accountants in England and Wales is warning taxpayers that although online self assessment is a useful tool complex UK tax laws could trip you up. It comes as a record number of people are expected to file online before the 31 January deadline.

‘Online self assessment is a convenient way to file your tax return but the UK has one of the most complicated tax systems in the world. You should be prepared as much as possible so as to avoid any slip-ups, you could end up paying the wrong amount of tax,’ said Jane Moore from the ICAEW Tax Faculty.

Tips from ICAEW include: making sure you need to do a return. Not everyone has to do a self assessment tax return. However, even if HMRC has not asked you for one, you may still need to do a return if you had a new source of income or capital gains in 2009/10 on which you need to pay tax. If this applies to you, tell HMRC right away.

It says to register online immediately if you have not yet done so and make sure you have all the necessary paperwork such as details about your employment income such as your P60 and P11D, interest bank statements, information on dividends from shares.

It says that overseas income and mistakes on self employed accounts often result in wrong submissions. And deductions such as gift aid donations and pension contributions should not be forgotten.

It also advises comparing the return with the previous year’s return. If there are any significant changes explain why on the form. There is white space where you can make notes which will help to avoid unnecessary queries from HMRC later.

Also it is important to save everything. ICAEW recommends saving a copy of your final return and print a copy of the receipt you receive when you submit it. You must keep records of all information used to complete your tax returns for 22 months after the end of the tax year or for five years and 10 months for those with a business or income from letting out property. There is a maximum penalty of up to £3,000 for each tax year for which records have not been kept.

‘These tips are for more straightforward cases but if you do need help, please contact an ICAEW chartered accountant. We are continually urging government to simplify the taxation system to ensure it is as clear and efficient as possible to help taxpayers when it comes to the deadline,’ added Moore.