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HMRC reveals ‘Top 10 oddest excuses’ for late tax returns

I found this on the Gov.uk website and thought is was well worth re-blogging

The following bizarre, exotic and flimsy excuses have all been used by tardy taxpayers:

  1. My pet goldfish died (self-employed builder)
  2. I had a run-in with a cow (Midlands farmer)
  3. After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else (London woman)
  4. My wife won’t give me my mail (self-employed trader)
  5. My husband told me the deadline was 31 March, and I believed him (Leicester hairdresser)
  6. I’ve been far too busy touring the country with my one-man play (Coventry writer)
  7. My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver)
  8. I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land (South East man)
  9. Our business doesn’t really do anything (Kent financial services firm)
  10. I’ve been too busy submitting my clients’ tax returns (London accountant)

All of these people and businesses received a £100 penalty from HM Revenue and Customs (HMRC) for filing late. They appealed against the decision using these excuses, but were unsuccessful.

HMRC’s Director General of Personal Tax, Ruth Owen, said:

There will always be unforeseen events that mean a taxpayer could not file their tax return on time. However, your pet goldfish passing away isn’t one of them.

If you haven’t yet sent your 2012 to 2013 tax return to HMRC, you need to do it online and pay the tax you owe by the end of January. With all the help and advice available, there’s no excuse not to.

To send an online tax return, you must be registered for HMRC Online Services. This involves HMRC sending you an Activation Code in the post, so allow a few days for this to arrive. To register for HMRC Online Services go to the HMRC website and follow the on-screen instructions.

 

Have you filed your Self Assessment Return?

sa-monthly-online-figures-2011-12

Last year, while millions of people were exchanging presents, feasting on turkey, and nodding off in front of the television, 1,548 people decided to take time out from the yuletide festivities and do their tax return online – a 40 per cent increase on Christmas Day 2011, when 1,100 people filed online.

The penalties for late Self Assessment returns are:

  • an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;
  • after three months, additional daily penalties of £10 per day, up to a maximum of £900;
  • after six months, a further penalty of 5 per cent of the tax due or £300, whichever is greater; and
  • after 12 months, another 5 per cent or £300 charge, whichever is greater.

There are also additional penalties for paying late of 5 per cent of the tax unpaid at: 30 days; six months; and 12 months.

Make sure you get yours done before the end of January!

steve@bicknells.net

 

High Income Child Benefit Charge

The High Income Child Benefit Charge (HICBC) is a tax charge which repays part of the child benefit received by high earners earning over £50,000 to a 100% repayment for those earning over £60.000. It applies to child benefit received from 7th January 2013.

Happy kid playing with toy airplaneWho does it affect?

You may need to pay a tax charge if:

  • you have an individual income over £50,000
  • and either you or your partner receive Child Benefit or someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep.

It doesn’t matter if the child living with you is not your child.

 

What do you need to do?

If you are affected by the tax charge, you can:

  • Stop receiving the Child Benefit (only recommended if you’re adjusted net income is over £60k). Follow this link for how to do this.
  • Carry on receiving the benefit and pay any tax charge at the end of the tax year.

How to calculate adjusted net income?

It is important to realise that the income used to calculate the tax charge is your adjusted net income. You can use the calculator on Gov.uk to work out your adjusted income.

How to pay the tax charge

If the tax charge does apply to you, you will need to submit a self-assessment return to HMRC by 31st January following the end of the relevant tax year. Do not rely on HMRC writing to tell you that you need to submit a return as they may not realise you need to. Normal self-assessment penalties apply if returns are late or incorrect.

How much do you need to pay?

The charge is 1% of child benefit received for every £100 of income over £50,000 of adjusted net income. The charge will never be higher than the amount of child benefit received and if the income is over £60,000 the amount paid back to HMRC will be equal to the benefit received.

Rebecca Taylor ACMA

Self Employed Tax Allowances

junge frau lernt für eine prüfung

Basically when you are self employed you spend money on 3 types of expense:

 

1. Capital Expenditure – Equipment & Vehicles

 

2. Business Expenditure – stock, wages, premises

 

3. Private Expenditure – day to day living expenses – mostly not allowed but some types of cost may still count as business expenses

 

In general its types 1 and 3 where sole traders and partnerships miss out on tax allowances.

 

For example, you could claim capital allowances on your car, if you use your car partly for private and partly for business you simply disallow a % for private use.

 

On other assets there is an Annual Investment Allowance which is currently £250,000 per year from January 2013.

 

For most business that will cover all their capital expenditure, but there are further allowances available too.

 

With regard to private expenditure, there are tax reliefs available for working from home

 

http://www.hmrc.gov.uk/incometax/relief-household.htm

 

If you have to spend money on tools or specialist clothing for your job you may be entitled to either:

 

  • tax relief for the actual amounts you spend
  • a ‘flat rate deduction’

 

http://www.hmrc.gov.uk/manuals/eimanual/eim32712.htm

 

steve@bicknells.net

 

Do I need to do a tax return?

Business woman

If any of the following apply then, YES, you need to do a tax return:

  1. You’re self-employed

  2. You’re a company director, minister, Lloyd’s name or member

  3. Your annual income is £100,000 or more

  4. You have income from savings, investment or property (unless collected via PAYE)

    • £10,000 or more from taxed savings and investments
    • £2,500 or more from untaxed savings and investments
    • £10,000 or more from property (before deducting allowable expenses)
    • £2,500 or more from property (after deducting allowable expenses)
  5. You need to claim expenses or reliefs

  6. You or your partner receive Child Benefit and your income is over £50,000

  7. You’re 65 and receive a reduced age-related allowance

  8. You get income from overseas

  9. You have income from trusts, settlements and estates

  10. You have Capital Gains Tax to pay

  11. You’ve lived or worked abroad or aren’t domiciled in the UK

  12. You’re a trustee

SA 2012-13 Jan Outdoor poster 3

For full details of who needs to do a tax return follow this link http://www.hmrc.gov.uk/sa/need-tax-return.htm

For details of how to register go to http://www.hmrc.gov.uk/sa/register.htm

I know that sometimes people simply don’t realise that they need to do a return, for example a newly appointed Director or someone receiving Dividends. HMRC often don’t know if you should be doing a return (if they think you should be they will contact you), so it is up to you to make sure you file a return and disclose your income to HMRC if any of the above apply.

If you think you have an excuse, think again!

http://stevejbicknell.com/2012/10/15/reasons-excuses-for-filing-your-self-assessment-return-late/

As you will see your chances of HMRC accepting your excuse are slim.

Employment Expenses – Use Form P87

As an employee you can claim tax relief for expenses incurred in doing your job (if not fully reimbursed by your employer), for example business mileage, cycling on business, hotels, meals, business phone calls, in fact anything as long as its business related

If your claim is less than £2500 you can make your claim using Form P87 without the need to do self assessment.

http://stevejbicknell.com/2011/12/20/how-to-claim-tax-relief-for-employment-expenses/

So having workout you need to do a return. and having registered online, and filed your first return with HMRC, what if you later find you have make a mistake, what can you do?

If you make a mistake on your tax return you’ve normally got 12 months from 31 January after the end of the tax year to correct it. This is called an ‘amendment’. For example, for the 2011-12 return you have until 31 January 2014 to make an amendment.

http://www.hmrc.gov.uk/sa/correct-repay.htm

What if you don’t file in time?

The penalties for late Self Assessment returns are:

  • an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;
  • after three months, additional daily penalties of £10 per day, up to a maximum of £900;
  • after six months, a further penalty of 5 per cent of the tax due or £300, whichever is greater; and
  • after 12 months, another 5 per cent or £300 charge, whichever is greater.

There are also additional penalties for paying late of 5 per cent of the tax unpaid at: 30 days; six months; and 12 months.

What if you don’t have all the answers, can you put in provisional figures?

There are occasions on which some information cannot be finalised within the formal self assessment time limits despite the taxpayer’s best efforts to do so. In such cases the taxpayer should include a ‘best estimate’ of the information in the tax return and, if appropriate, a corresponding provisional figure of the tax due. The provisional figures should be clearly identified as such in the tax return. A tax return containing a provisional figure should only be submitted once it is clear that a more accurate figure will not be available before the filing date.

http://www.hmrc.gov.uk/manuals/salfmanual/salf206.htm

steve@bicknells.net

Cash Accounting has arrived, but will it reduce your tax bill?

Stress business woman

You can use the cash basis for Self Assessment Tax Returns (starting from 6th April 2013) if you:

  • are a small self-employed businesses (sole traders and partnerships but not Limited Liability Partnerships)
  • have an income of £79,000 or less a year (this is the threshold when you have to register for VAT)

You can choose to record your business income and expenses over the tax year in 1 of the following ways:

  • using cash basis – record money when it actually comes in and goes out of your business (all money counts – cash, card payments, cheque, any other method)
  • using traditional accounting (accruals basis) – record income and expenses when you invoice your customers or receive a bill

Cash basis might suit smaller businesses because, at the end of the tax year, you won’t have to pay Income Tax on money you haven’t received yet.

You must keep records of:

  • business income received
  • business expenses paid

Depending on what you use simplified expenses for, you need to record business miles for vehicles, hours you work at home and how many people live on your business premises over the year.

Sounds simpler so far, doesn’t it.

But what about …..

  • Suppliers – if you have trade accounts with suppliers then you will have creditors, many small businesses get paid quickly for example a shop or a window cleaner, they don’t have debtors, so the cash basis may not be the best option
  • Capital Allowances – many small businesses will claim capital allowances for their car (and claim most of the running costs too), with the cash basis you can only claim a set mileage allowance https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles-
  • Equipment Finance – Under cash accounting money you owe isn’t counted until you pay it (unlike traditional capital allowances) and interest and charges are limited to £500 https://www.gov.uk/simpler-income-tax-cash-basis/income-and-expenses-under-cash-basis

Cash accounting may be simpler but will it reduce your tax bill?

steve@bicknells.net

Deadline to register for self assessment tax return is 5th October

You may never have worried about filling in a tax return before now. Unfortunately you could be in for a shock and a penalty if you fail to register a new source of income for the tax year ending April 2013. You have until October 5th to register any change in circumstances with HMRC. This is particularly likely to affect those employees with earnings over £50,000 still claiming child benefit.

So who needs to complete a tax return?

You need to complete a self assessment tax return if any of the following apply:

  • You are self-employed
  • You are a company director, unless it is a non-profit organisation and you don’t receive payments or benefits
  • You are a Minister of Religion of any faith
  • You are a Lloyds Name/Member
  • You have annual income over  £100,000
  • You are an employee/pensioner but have other taxable income
  • You are over £10,000 taxed income from savings/investments.
  • You have over £2,500 of untaxed savings/investments.
  • You have over £10,000 of property income before expenses or £2,500 property income after expenses
  • You earn over £50,000 and are still claiming child benefit.

A phone call to the HMRC self assessment helpline on 0300 200 3310 will enable you to beat the deadline and register for a tax return for your income source. But allow yourself plenty of time for the call. My phone call this morning to register for a tax return took 25 minutes to be connected to an HM Revenue & Customs Officer.

Helen Alexander ACMA

helen@millbrookfm.co.uk

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