Many of those who complete a tax return have now switched to filing online which still allows you to file by 31 January 2012 for the 2010/11 tax year. However, for many taxpayers this is either impossible or impractical, or they still prefer to complete and submit a paper return, which they must do by the earlier deadline of 31 October 2011.
In the past, it was possible to reduce the £100 initial penalty if you filed late but tax was paid by the following 31 January. This is no longer the case (see below under ‘Penalties’). In addition, there are significant new daily and tax-based penalties.
Here, we cover the following topics:
1. Overview of 2010/11 deadlines and penalties
2. Different types of paper return - the long and short of it
3. Key pointers for paper filers
a. The deadline
b. Submitting your return and keeping a record of it
c. Your tax calculation
d. Having your balancing payment collected via your PAYE code
4. Penalties
a. £100 fixed penalty if return is filed after the deadline date
b. £10 daily penalty
c. Further fixed or percentage penalties
5. Online filers
6. Partnerships, Trustees and Executors – do not get caught out!
The table below summarises the ordinary tax return deadlines and key penalty dates.
| Paper tax return | Online tax return |
| Tax return deadline | 31 October 2011 | 31 January 2012 |
| If you want 2010/11 tax of up to £2,000 to be collected via your 2012/13 PAYE code, submit your tax return by | 31 October 2011 | 31 January 2012 |
| 2010/11 balance of tax to be paid by | 31 January 2012 | 31 January 2012 |
| First payment on account of tax for 2011/12, if due | 31 January 2012 | 31 January 2012 |
| £100 fine for a late return chargeable from *see note below | 1 November 2011 | 1 February 2012 |
| £10 per day penalties for a return more than three months late start from *see note below | 1 February 2012 | 1 May 2012 |
| Further 5% of tax due or £300 fine for a return six months late due from *see note below | 1 May 2012 | 1 August 2012 |
| Further 5% of tax due or £300 fine for a return 12 months late due from *see note below | 1 November 2012 | 1 February 2013 |
* Note:
From the table above, you can see there is an important difference with penalties for late filing of a paper return compared to late filing of an online return. Because the filing date for paper returns is three months earlier than for online returns, the penalty trigger dates are also three months sooner. Therefore, if you file a 2010/11 return on or after 1 November 2011, you would be well advised to do so online to avoid a £100 penalty. Online filing is even more important if you file after 1 February 2012 – otherwise, you will already be into a situation where daily penalties are due.
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There are two types of paper tax return – a short version and a long (or ‘full’) version. Both the full tax return and the short tax return have changed little in layout this year. You can only use the short form if HMRC have sent you one. If they have sent you the long one, you have to use it and cannot ask for the short one instead.
There are some situations when you cannot use a short tax return even if you have been sent one. If you find that to be the case, you will need to obtain the full version and any additional pages you require. These can be downloaded from the HMRC website or you can call the Self-Assessment helpline on 0845 900 0444 (Text Relay prefix 18001, Textphone Taxes contact centre 0845 302 1408).
But it is worth noting that, even if you have made some small capital gains, you will still be able to use the short tax return by following the instructions at box 7.4, now found on page 3. The short tax return can also now be used if you are repaying an income-contingent student loan.
If you use the full return and are entitled to the married couple’s allowance (basically where you are married or in a civil partnership and one of you was born before 6 April 1935), make sure you claim this by completing the boxes on page 3 of the separate ‘Additional information’ sheet. This can be easily missed.
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Things to note when filing your 2011 paper tax return are:
The filing date for paper returns is 31 October 2011. After that date any paper return is deemed to be filed late. If you do file a paper return late, then do not file again online as only the first filing is counted and a penalty charge will have already arisen.
It is always helpful to keep a copy of the return together with the other records you used to prepare it – particularly if it gets lost or HMRC raise any queries relating to it (an ‘enquiry’).
Despite our many representations, HMRC still will not give receipts for tax returns either posted to them or handed in at an Enquiry Centre. If you are posting the tax return, ask the Post Office for a certificate of posting or send it recorded delivery, and keep the receipt with your other papers. If you hand the return in at an Enquiry Centre, make a diary note of when. It is now even more important to have some record of submitting the tax return given the new penalty charges. The date you have to pay any tax due is still 31 January 2012 (and you might also have to make your first payment on account for 2011/12 by that same date).
c. Your tax calculation
If you file your paper return by 31 October 2011, HMRC guarantee to calculate your tax liability and advise you in time to pay it by 31 January 2012.
d. Having your balancing payment collected via your PAYE code
If you have underpaid tax, and some or all of your income is taxed under PAYE, you can opt to have the underpayment collected through your 2012/13 coding if your paper return is filed by 31 October 2011 and the underpayment is no more than £2,000.
This £2,000 limit has recently been increased to £3,000, and we understand HMRC will apply the increased limit for 2011/12 tax returns onwards. HMRC have said, however, that they recognise that some self-assessment filers with 2010/11 balancing payments between £2,000 and £3,000 might like to take advantage of the new increased coding out limit. If you are in that situation, you should contact HMRC before 30 December to discuss whether there is potential for coding out all or some of your balancing payment in your 2012/13 tax code.
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a. £100 fixed penalty if return is filed after the deadline date
This will apply if a paper return is filed on or after 1 November 2011. A penalty notice will be issued as soon as the return has been processed.
In previous years it was possible to reduce the penalty to NIL if you had no tax to pay or paid it all before the following 31 January. If you owed tax of less than £100 then the penalty was reduced to an amount equal to the tax. These rules no longer apply, and £100 will always be due if you file late and do not have a ‘reasonable excuse’ for doing so. Details of how to make a ‘reasonable excuse’ claim can be found on HMRC’s website.
This starts three months after the deadline date which will be 1 February 2012 for paper filers. It can rise to a maximum of £900 – that is, £10 per day for up to 90 days.
As paper filers do not receive any receipt for their tax return, this might be the first time they fully appreciate that a return they thought they had submitted on time has not been received by HMRC, or been lost in the system. However, we understand that HMRC will be sending out reminder letters to those who usually file on paper but have not done so by 31 October. It is important therefore that if you have filed a paper return and you receive one of these letters you contact HMRC immediately. Also, if you have not received your tax calculation by mid-January, then you should check with HMRC whether they do have your tax return, as all calculations are guaranteed by the end of January if you have filed your paper tax return on time.
c. Further fixed or percentage penalties
If your return is filed six months late, an additional £300 or 5% of the tax due will be charged, whichever is the higher.
If your return is filed twelve months late, a further (minimum) of £300 or 5% of the tax due will be charged, whichever is the higher.
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HMRC offer free software on their website for most who feel confident to file online and have access to a computer and the internet (see HMRC’s website and follow ‘do it online’ from the home page). Exceptions to this are partnership, and trust and estate returns (see below) and some supplementary pages for individual returns which can only be filed using commercial software. The main benefits, apart from the later filing date, are:
- you get an instant confirmation that the return has been received;
- an immediate calculation of the tax payable is available; and
- if you are due a refund of tax, this is likely to be received more quickly.
If you wish to make the switch to online filing, you should not leave it too late to register as it will take several days before you receive the authorisation code which enables you to get started.
If you are unable to file online because of problems with HMRC’s online service, and are instead forced to file a paper return to meet the 31 January deadline, then you should appeal against the penalty on the grounds that you had a ‘reasonable excuse’ for missing the deadline. Details of how to make a ‘reasonable excuse’ claim can be found on HMRC’s website and you will be asked to give details of any on-screen error messages that appeared.
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If you want to file your partnership tax return online, you need to buy commercial software. HMRC software is only able to accept information for the partnership pages in individuals’ tax returns and there is no facility to file the separate partnership return using their software. The same also applies to trustees and executors filing trust and estate tax returns – these can only be done through commercial software.
Your options are therefore to:
- submit a paper version of the partnership/trust and estate return by 31 October; or
- purchase a commercial software package (HMRC give a list of commercial software providers on their website) and register through the HMRC online services well before 31 January to give time for the authorisation code to be sent out. Note that you also need to register each partner separately if they want to file their returns online.
Immediate fixed penalties of £100 per partner are applied for filing a partnership return late, together with daily, six-month and twelve-month penalties for those who delay further.
Our website gives further guidance generally on self assessment.
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(30-09-2011)
Contact: Jan Tish (please use form at http://www.litrg.org.uk/ContactUs)
