Outstanding tax returns? Act now - an opportunity to put things right

Published on 15 July 2013

HM Revenue & Customs (HMRC) have announced a new campaign to encourage taxpayers with outstanding tax returns to bring their tax affairs up to date. There is only a short window of opportunity, so take action now.

The campaign, called ‘My Tax Return Catch Up’ , is aimed at taxpayers who have received a self assessment tax return or notice to complete a tax return for tax years up to and including 2011/12, but who have not yet submitted it.

HMRC will also write directly to several thousand people that they have identified as having failed to submit tax returns.

If you have an outstanding tax return for 2011/12 however, you should submit it before 31 July 2013. This will save you a penalty of £300 or 5% of the outstanding tax, whichever is higher, for filing your tax return more than six months late. Under the campaign, late filing penalties will remain in place. So if you sign up to the campaign and delay sending in your 2011/12 tax return until after 31 July 2013, you will suffer the additional late filing penalty.

Who can use My Tax Return Catch Up?

You can use the campaign if you have an outstanding tax return for any tax year up to 2011/12. If this applies to you, HMRC will have sent you a tax return or a notice to file a tax return. If you need to complete a tax return, but are not currently registered for self assessment, you cannot take part in the campaign. Instead, you should contact the Self Assessment Helpline.

During 2012 HMRC ran a similar campaign, the ‘Tax Return Initiative’, for higher rate taxpayers only. If you were contacted by HMRC as part of that campaign, you will not be able to use My Tax Return Catch Up.

You cannot use the campaign if HMRC have already opened an investigation, enquiry or compliance check into your tax affairs.

Do I have to use My Tax Return Catch Up?

You may have received a tax return or a notice to file a tax return for 2011/12 or an earlier tax year, but you may not have a tax liability for that tax year. HMRC have recently exercised discretion in withdrawing notices to file tax returns if the taxpayer should not have been in self assessment. In Finance Bill 2013 there is legislation to grant HMRC the right to withdraw a notice to file a tax return if the taxpayer should not be in self assessment. There is a deadline of two years from the end of tax year, which means that you may be able to ask HMRC to withdraw a notice to file a tax return in respect of 2011/12.

Before asking HMRC to withdraw a notice to file a tax return, you should check carefully whether or not you should be in self assessment for that tax year.

What do I do?

There are three steps to the campaign. They all have the same deadline of 15 October 2013, so in effect all three steps can be completed together.

Firstly, tell HMRC that you want to join the campaign. There are various methods of notifying HMRC:

  • You can complete and submit a form electronically.
  • You can print and post the form to HMRC :
    HM Revenue & Customs
    Local Compliance Centres
    My Tax Return Catch Up team S0790
    PO Box 3900
    Glasgow
    G70 6AA
  • You can telephone the My Tax Return Catch Up Helpline.

Secondly, you must complete and submit your outstanding tax returns, by 15 October 2013. For tax returns for the tax year 2009/10, 2010/11 and 2011/12, you can either submit online or on paper. If you have outstanding tax returns for 2008/09 or earlier, you should telephone the My Tax return Catch Up Helpline.

Thirdly, you must pay any income tax and National Insurance Contributions that you owe, or claim any repayment that is due, by 15 October 2013.

Will I have to pay penalties?

HMRC have not specified the level of penalties that will apply to this campaign. They do say that taking part in the campaign will improve your chances of receiving a lower penalty than if you do not use the campaign.

There are several different kinds of penalty that may apply. Under the standard late filing penalty regime, tax returns for 2011/12 and earlier that have not yet been submitted will already have incurred a fixed penalty and daily penalties. In addition, there may be surcharges and penalties for the late payment of income tax. These penalties will be payable.

The penalties that are most likely to be reduced by participating voluntarily in the campaign are behavioural late filing penalties. HMRC may apply these penalties in cases where a tax return is more than 12 months late. These penalties can be up to 100% of the tax due, but under My Tax Return Catch Up HMRC may reduce them to nothing.

What if I cannot pay the outstanding income tax?

You should still submit your outstanding tax returns by 15 October 2013. You should telephone the My Tax Return Catch Up Helpline, and it may be possible to set up a payment plan, to spread your payments of the outstanding income tax.

Should I seek advice?

Although HMRC indicate that the process is straightforward, we would argue that it is fairly complex. There are detailed notes to read, calculations to do and completing a self assessment tax return in itself can be complex.

You should bear in mind that if you have claimed tax credits for any of the tax years for which you are submitting a late return under this campaign, your previous tax credit awards could be affected if your taxable income figure is higher than the amount you declared at the time for tax credit purposes. You may also have to pay a penalty.

Our advice is to consider employing a professional tax adviser, particularly if you have to complete a number of tax returns under the campaign.

(15-07-13)

Contact: Robin Williamson (please use form at http://www.litrg.org.uk/ContactUs)