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LITRG reminds self assessment taxpayers and also anyone who might be able to claim tax back for old tax years of January deadlines.

Introduction

Self assessment taxpayers will be familiar with 31 January as a key deadline. Below we set out the various matters to consider.

We also remind those who are not required to complete tax returns but who might be due a refund for earlier years that claims for the 2004/05 tax year can generally no longer be made after 31 January 2011.

1. Do you still need to file your 2009/10 self assessment tax return? For online filing, the deadline is 31 January 2011

If you file your tax return online, you must do so by 31 January. And if you were sent a paper return, but have not yet filed it, you can instead file online provided you do so by 31 January. But if you have already filed a paper return late, having missed the paper return deadline of 31 October 2010, you cannot file again online to escape a penalty (see more on penalties below).

If you have not filed online before, you have to register first and wait for HMRC to send you your user ID and activation PIN in the post. You will normally have to wait up to seven days for HMRC to post this information to you, so it is prudent to register well before the deadline.

You should also note that the HMRC software has limitations. It does not provide all of the tax return supplementary pages, nor can you file partnership or trust and estate returns using the HMRC system. Make sure you check well in advance whether you can use the HMRC system or if you need to buy third party software.

2. Self assessment tax to pay? The 31 January 2011 deadline, and what to do if you cannot meet it

- 2009/10

31 January is the deadline for payment of your tax liability, or remaining tax liability, for the year 2009/10. Note that the term ‘tax liability’ includes more than just income tax – it can also include capital gains tax, student loan repayments and Class 4 National Insurance contributions, if any are due.

Payment can be made via HMRC’s website. But, watch out! If you pay by credit card, you will be charged a non-refundable transaction fee of 1.25%.

- 2010/11

31 January 2011 is also the deadline for the first payment on account for 2010/11, if one is due. If you are not sure whether you need to make payments on account, how much they will be, and how to reduce them, guidance is available on the LITRG website (see useful links).

- What to do if you cannot pay

If you think you will not be able to pay, HMRC should respond sympathetically if you apply for time to pay before 31 January. The Department is more lenient to those who ask for more time before a tax liability falls due, than to those who miss the payment date then ask for time to pay as an afterthought. So if you are worried you will not be able to pay, contact HMRC as soon as possible. Both individuals and those in business should use the Business Payment Support Line on 0845 302 1435.

3. Penalties for late self assessment tax return filing

There is an automatic penalty of £100 for late filing, but currently the penalty is capped by the amount of tax outstanding. In other words, you will not have to pay the full £100 if you owe less than that amount in tax on 31 January; and if you owe nothing on that date, you will not be charged any penalty.

This can work in your favour if you file on paper but have missed the 31 October filing deadline. Technically, a 2009/10 paper return filed after 31 October 2010 is late (even if it is filed on or before 31 January 2011) so you will have incurred a late filing penalty. However, if you have paid all the tax due for 2009/10 by 31 January 2011, your £100 penalty will be reduced to nil.

But this is the last year in which the ‘capping’ rule applies- from April 2011, an automatic fixed penalty will apply for late returns whether or not all tax due has been paid on time.

4. Getting help with your tax return

If you do not think that you can do the sums for yourself, then you need to hire a tax adviser or, if you have a low income and cannot afford to pay for an adviser, you can try the charities TaxAid or TaxHelp for Older People (the latter broadly serving the over-60s). But bear in mind that everyone will be extremely busy at this time of year.

5. What to do if you have a technical problem filing your self assessment online

Also, if you try to file online, but cannot because of a technical problem such as a fault in HMRC’s software, you can instead send in a paper return and claim reasonable excuse for filing it after the paper deadline of 31 October. HMRC will accept a reasonable excuse claim in such circumstances, which means that there will be no late filing penalty.

6. Reclaiming tax for earlier years

The rules about time limits for repayment claims differ depending whether you are or are not in self assessment.

If you are a self assessment taxpayer, you can only claim repayment of overpaid tax for four years following the end of the tax year. This means that you cannot go back any earlier than the 2006/07 tax year, and the deadline for claims for that year expires on 5 April 2011.

For taxpayers not in self assessment, tax repayment claims can be made for five years and ten months following the tax year to which the repayment relates. 31 January 2011 is therefore the last day for making any such claims for repayment of tax for 2004/05. After 31 January, 2004/05 falls away and the first year for which a claim can be made becomes 2005/06. From 6 April 2012, the four year time limit will apply to non-self assessment taxpayers as it does now to those in self assessment.

Exceptionally, a concession allows repayments to be made for earlier years in cases of official error by HMRC or another government department.

Useful links

Paying self assessment tax via HMRC’s website
Guidance on self assessment payments on account
Finding a Chartered Tax Adviser
TaxAid
TaxHelp for Older People