Just days to go to submit paper tax returns: what do you need to know?

The paper tax return deadline is just days away: What you need to know and five tips if you’re filing at the last minute

Dawn Register is head of tax dispute resolution and accountancy and business advisory firm BDO

Dawn Register is head of tax dispute resolution and accountancy and business advisory firm BDO.

The deadline for submitting your paper tax return is now just days away – falling on Saturday 31 October 2020. 

We always advise clients to not wait until the last minute to get their ducks in a row, and no doubt most taxpayers would rather not spend their Friday evening and half of the weekend sorting their financial affairs!

This year more than ever taxpayers will want to calculate their tax bill and plan for cash flow in advance of payment deadlines. The tax payment deadline for 2018-19 liabilities remains 31 January 2021. 

However HMRC is extending its ‘time to pay’ support where cash flow difficulties arise, including an online facility to apply to spread payments of up to £30,000. At a time when many people are concerned about tax debt, cash flow planning is essential.

If you miss the paper filing deadline you have two choices. If you are a technophobe, you could file a late return on paper and face a fine of £100 (more if you don’t file it by 31 January – HMRC can begin to charge £10 per day). 

If you switch to an online return and file that before 31 January there will be no filing penalty. 

If either paper or online returns are still outstanding six months after their submission deadlines then HMRC will charge an additional penalty of £300 or five per cent of the tax liability shown on the return, whichever is greater.

The deadline for submitting your paper tax return is falling on Saturday 31 October 2020

The deadline for submitting your paper tax return is falling on Saturday 31 October 2020

Here are some tips if you are putting your paper return together last minute:

  • Make sure you have all the relevant papers ready to hand before you start filling in the form – a basic point but crucial to avoid errors or omissions down the line. This will include downloading or requesting bank statements, expense receipts, employment income and self-employed records
  • Check whether your figures are gross (including tax) or net (excluding tax) on items like dividends and bank interest. This consideration is critical to ensuring you are paying the correct amount of tax
  • For those who are employed, check you have all your PAYE coding notices for the tax year. In particular, check if there is any overpaid or underpaid tax included in your code. This will need to go into your return to make sure the final number is correct
  • Check all your numbers thoroughly before you sign and post your return. Many errors are made by simple transposition – an extra zero can make a big difference! Don’t forget to keep a copy of what you send.
  • Last but not least, if later on you spot that you made a mistake on your return, you have 12 months to submit an amended one. However, if you haven’t paid all the tax due by 31 January you will have to pay interest on any tax paid late with your amended return.

Leaving your tax return to the last minute inevitably means that things are done in a rush and, with the best will in the world, mistakes can be made which give HMRC further opportunities to charge tax geared penalties for errors.

Furthermore, following HMRC’s announcement in July that phase two of its ‘Making Tax Digital’ programme will apply to all self-employed and landlord businesses with turnover in excess of £10,000, perhaps now is the time to be brave and move to online reporting.

Dawn Register manages voluntary disclosures and resolves complex tax investigations. She also uses mediation to resolve disputes with HMRC. Dawn specialises in UK personal tax and cross border issues. Her recent work has focused on changes in HMRC powers, information exchange and disclosure opportunities.