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LITRG gives a few reminders to help review your finances at this time of the year – make sure you are not missing any tax deadlines or losing out on benefits.

Introduction

As part of a monthly series of reminder articles, LITRG gives current advice below on tax and tax credits matters to consider at this time of year, starting with self-assessment taxpayers then moving onto PAYE taxpayers and finally looking at tax credits claimants.

If you missed the deadline for filing your self-assessment tax return on paper

If you have filed your 2009/10 self-assessment return on paper, and you posted it in good time to reach HMRC by 31 October, all should be well.

However, if you have not yet filed your paper return, there are now three ways of avoiding a £100 penalty:

• by filing on paper now and paying all the tax due by 31 January 2011;
• by not filing on paper, but instead filing online by 31 January 2011; or
• by filing on paper if you have a reasonable excuse for being late, and appealing against the ensuing penalty notice on those grounds.

Do note, however, that penalty notices for late returns are not issued until February, ie after the 31 January deadline for online returns so in the short term ‘no news’ is not necessarily ‘good news’! And, as previously advised in our October article, always make sure to keep a copy of the return and a proof of postage or registered post confirmation with the other records and workings you used to prepare the return.

Reasonable excuse

Note that HMRC have a very restricted view of what constitutes a reasonable excuse. They will normally accept industrial action at the Post Office, loss of tax records through fire, flood or theft, serious illness which prevented you from dealing with your tax affairs (for example coma, heart attack, stroke), or death or serious illness of a close relative or domestic partner.

You do not have to wait until you receive the penalty notice – you can write to HMRC setting out your appeal beforehand, as per their guidance.

However, if HMRC reject your appeal, you have the right to ask for an independent review of their decision, or to seek a Tribunal hearing.

When your ‘reasonable excuse’ ends

Of course, you might be late with your return and the reason which made you miss the deadline is still causing you problems now. Note that you should submit your return as soon as possible after the problem is resolved. It would also be useful to note in the ‘additional information’ section of the return why it is late.

Paying your self-assessment bill through PAYE

If you have filed your return on paper, you had until the end of October to request HMRC to collect your tax for 2009/10 through your 2011/12 PAYE code, provided the amount due is £2,000 or less.

We understand that up until the end of November you can still request this treatment of your tax liability but there is no firm guarantee that HMRC will be able to include the tax in your code. After the end of November this option will not be available where you file on paper.

If you file online and you want your tax coded in this way, HMRC ask for your return to be submitted by 30 December 2010.

P800 tax calculations

As we have reported in several recent news items, HMRC have been issuing tax calculations in recent weeks to PAYE taxpayers who hitherto might have had little direct contact with the tax system. The ‘P800’ calculation might show that you owe some tax or that you are due a refund. Whichever of these is the case, you should first check the calculation and ensure you are happy with it or query it with HMRC if you are in any doubt. If it shows you owe tax, consider whether you can argue that you should not have to pay it. Follow our most recent guidance for help.

Tax credits – confirm your estimated income

Each year, HMRC send renewal forms to tax credit claimants. The principal deadline for renewing 2009/2010 claims was 31 July 2010. But some claimants, for example those who are self-employed, may not have known their 2009/2010 income at that time and may have provided HMRC with only an estimated income by that date. For them, the date by which final figures must be reported is 31 January 2011, which fits in with the self-assessment filing date for the self-employed.

If final figures are not sent in by 31 January, HMRC will finalise your 2009/2010 claim using your earlier estimate. This may be incorrect and as well as leading to an incorrect 2009/2010 award could also lead to your 2010/2011 claim being wrong.

Have your tax credit payments stopped?

As noted above, all tax credit claimants are required to renew their claim each year, most by completing ‘renewal’ forms or telephoning the helpline and giving or confirming details of their income and circumstances over the year. This process finalises the claim for the year just ended and acts as a claim for the new tax year. If HMRC did not receive your renewal papers or you did not renew by phone by 31 July 2010, it is likely that HMRC will have ended your claim and sent you a statement of account explaining why the payments have stopped and detailing any overpayment.

See our August article for more information about renewals. Remember, even if you don’t want to continue claiming, if you have received forms from HMRC you must complete them otherwise you may find yourself with an overpayment.

Normally, you have 30 days from the date on that statement of account to contact HMRC and have your claim reinstated. Due to the heavy call volumes this year, many claimants had problems getting through to the tax credit helpline to renew. HMRC therefore decided to extend the period during which they will reinstate a claim where the 31 July deadline was missed to 60 days from the date on the statement of account. It is important to take immediate action if your payments stop by contacting the tax credit helpline on 0845 300 3900 (textphone 0845 300 3909).

Finally, as for tax matters, so too for tax credits should you always keep independent evidence of postage and notes of telephone calls when dealing with HMRC.