Hopefully your tax return was filed by the 31 January 2020 deadline. And hopefully the information it contained was correct. This is a message for anyone who sailed close to the wind, or who heaven forbid, hasn’t filed theirs yet. As each deadline looms, ask yourself, is your tax return right – and submitted on time?
In 2019 HMRC released information showing they had opened more than 300,000 self-assessment tax investigations into accounts relating to the 2017/18 tax year.
Accountants Moore analysed the information, which shows that errors in returns act as red flags for HMRC. They might not be deliberate, but they can lead to investigations and even penalties.
Is Your Tax Return Right – and Submitted?
Here at Jones Harris we make sure that all of our client tax returns are filed by the appropriate deadlines. However, it only takes a problem with internet connections or technology to result in less well prepared people missing the deadline.
Or you may prepare your own tax return and have put it off to the point where it’s just late…
Late filing is also likely to attract the attention of Her Majesty’s Revenue and Customs. Would you believe that last year a total of 477,000 tax returns missed the deadline. That alone resulted in £47.7m of penalties.
Even if you’ve not taken ‘reasonable care’ you could still be looking at a 30% penalty. If your mistake is ‘deliberate’, HMRC can impose a penalty of up to 100% of the tax in question. In fact, they issued more than 31,500 penalties for ‘deliberate’ mistakes during the 2018/19 tax year.
It’s a good idea to explain why there are any sudden increases in costs or reductions in income which may result in your paying less tax. It may stop an enquiry from being opened.
You should also bear in mind that HMRC is more advanced and often more invasive in its data collection than many other countries. For example, they’ve been gathering evidence from social media accounts for years, whereas French tax authorities have only just obtained permission to do this. It’s amazing what they can find out.
Tax investigations aren’t really to be recommended – they can be very stressful and last for months.
Another way to give yourself and/or your business a cushion against the cost and stress of an investigation is to join the Jones Harris Professional Fee Protection scheme. It will enable us to deal with the problem for you.
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