Tax Return Filing Dates

• For partnership and personal tax returns, the last filing date is 31 January after the tax year end (e.g. 31 January 2006 for the 2004/05 tax year).
• There is an automatic late filing penalty of £100 per personal return and £100 per partner for a partnership return.
• If the tax return is submitted more than 6 months after the last filing date, there is a further automatic late filing penalty of £100 per individual or per partner.
• If the tax return is submitted more than 12 months after the last filing date, there is a tax-based penalty.
• The Inland Revenue has the power in certain circumstances to charge £60 per day for every day that the tax return is late.
• The late filing penalty may be extinguished if the doctor or partnership has a reasonable excuse not submitting the tax return on time. A reasonable excuse would be an event outside the individual or partnership’s control, e.g. death or serious illness.

Record-Keeping & Penalties

• Financial penalties were introduced with self-assessment for failure to keep records (1996/97 onwards).
• Records must be kept
  • For employees, records must be kept for 22 months after the tax year-end
    (i.e. 31 January 2006 for the 2003/04 tax year).
  • Individuals with property income, self-employed or private earnings,
    records must be kept for 5 years from the 31 January after the tax year
    (i.e. 31 January 2010 for the 2003/04 tax year).
• Records include:
  • accounts, books, contracts, receipts & vouchers.
  • interest statements & dividend vouchers.
  • PAYE records i.e. P60, P45
• The Inland Revenue has the power to call for underlying records to support all figures included in the tax return.
• The penalty for failure to keep records is up to £3000.

Tax Payment

• Self-assessment introduced payments on account payable 31 January in the tax year and 31 July after the tax year end. These are based on the previous year’s tax liability and amount to 50% of this liability on each instalment (excludes tax deducted at source).
• Any balance of tax due for a tax year is payable by 31 January after the end of the tax year, together with the current tax year’s first payment on account.
• No payments on account are necessary if
  • The total payments on account are less than £500 or
  • The individual had 80% or more of their previous year’s tax liability
    deducted at source (i.e. PAYE system, taxed interest etc).
    

Inland Revenue Enquiries

• Prior to self-assessment the Inspector of Taxes only commenced an investigation if he was dissatisfied with submitted tax returns or accounts or held details of undeclared income.
• Under self-assessment an enquiry (old investigation) can be opened by random selection or for any reason. The enquiry will be opened and closed by a formal written notice. The time limit for opening an enquiry is normally 12 months after the last tax return filing date (i.e. 31 January 2006 for the 2003/04 tax year). However, the Inspector still has powers to enquire into a taxpayer’s affairs after the 12 month period if he believes there is evidence of non-disclosure or fraud etc.

This information sheet is designed to be a general guide only and Taxation Solutions Limited accepts no liability for any loss occasioned in reliance on the information given therein.