As we prepare for Christmas parties and merriment, perhaps the last thing on our minds is tax, the dreaded annual tax return, which is likely to be quarterly soon, but the January 31st tax deadline looms.
If you haven’t already done your book keeping, and have all your information together, either to do the return yourself, or for your accountant to do it for you, then I suggest you leave some time available over the holiday period, or in January, to get it done.
Staying on top of accounts is always the best way to go about running a successful business, and buy-to-let is a business as much as any other, so nobody wants to spend their holidays working on accounts. What’s more, if you leave things a long time it’s all the more difficult to remember what’s gone on, and if the Revenue (HMRC) come knocking, you will find yourself in a pickle.
There’s lots of fairly inexpensive software available to help you keep on top of your book-keeping and property management – most of the recognised property and accounting software suppliers advertise here: www.landlordzone.co.uk/directory/suppliers-directory/software
Excuses won’t wash with HMRC, like the rest of us you must pay your tax by 31st Jan, otherwise you will be fined and by not doing so you are asking for an investigation!
Each year HMRC says it receives numerous excuses from Self-Assessment taxpayers who didn’t complete their tax return on time.
“My tax return was on my yacht…which caught fire”
“A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed”
“My wife helps me with my tax return, but she had a headache for ten days”
“My dog ate my tax return…and all of the reminders”
“I couldn’t complete my tax return, because my husband left me and took our accountant with him. I am currently trying to find a new accountant”
“My child scribbled all over the tax return, so I wasn’t able to send it back”
“I work for myself, but a colleague borrowed my tax return to photocopy it and lost it”
“My husband told me the deadline was the 31 March”
“My internet connection failed”
“The postman doesn’t deliver to my house”
These are some real instances of reasons which were used in unsuccessful appeals against HMRC penalties for late returns.
Ruth Owen, HMRC Director General of Customer Services, says:
“Blaming the postman, arguing with family members and pesky insects – it’s easy to see that some excuses for not completing a tax return on time can be more questionable than others. Luckily, it’s only a small minority who chance their arm.
“But there will always be help and support available for those who have a genuine excuse for not submitting their return on time. If you think you might miss the 31 January deadline, get in touch with us now – the earlier we’re contacted, the better.”
The deadline for sending 2015-16 Self-Assessment tax returns to HMRC, and paying any tax due, is 31 January 2017.
Self Assessment taxpayers can now also submit their return via their Personal Tax Account; HMRC says it takes five minutes to sign up for an account says HMRC: www.gov.uk/personal-tax-account
If you are submitting your 2015-16 Self-Assessment return online for the first time, you will need to register for SA Online – you can do it at: www.gov.uk/selfassessment
HMRC has previously announced that it will treat those with genuine excuses leniently; they tend to focus penalties on those who persistently fail to complete their tax returns and deliberate tax evaders. However, they will ask for evidence. The ten reasons listed above were all declined on the basis that they were either untrue or not good enough reasons.
Customers who provide HMRC with a reasonable excuse before the 31 January deadline can avoid a penalty after this date.
Help is available from the GOV.UK website at www.gov.uk/selfassessment or from the Self-Assessment helpline on 0300 200 3310.
The penalties for late tax 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% of the tax due or £300, whichever is greater after 12 months, another 5% or £300 charge, whichever is greater. There are also additional penalties for paying late of 5% of the tax unpaid at 30 days, six months and 12 months.
HMRC is providing some useful online tutorials specifically aimed at landlords and anyone with rental property income – click here