If you've been sent a HMRC self-assessment form, or received notification from HMRC since April 2015 that you need to fill one in then yes, you do.
According to the HMRC’s website, you need to file a tax return if:
If your tax is deducted by your employer, you usually don't need to submit a form unless you get additional income from a second job or freelance work. If HMRC has asked you to complete a self assessment tax return but you don't think you need to, get in contact ASAP. If you don’t and you simply don't send one in, you'll have to pay a penalty.
If you're late making your payment on account or your tax bill you'll be charged 5% interest. This is on top of the minimum £100 fine for missing the deadline for filing your tax return. From there, penalties can start to spiral. You can find more details of HMRC's late payment penalties here or use HMRC's penalty calculator to estimate any costs to you here.
You can appeal against HMRC's fines, if you have a "reasonable excuse". HMRC recently published a list of some of the worst excuses they have been provided which, it’s hard to believe, actually included: ‘The dog ate my tax return’, as well as, ‘I got the deadline wrong’ and, ‘My husband ran off with my accountant’. However, examples of a reasonable excuse that HMRC gives include:
If you are unable to pay the tax owing, there are a number of options available that you should consider. Initially, if you feel the amount of tax you are due to pay is incorrect, there are a couple of HMRC related processes to check:
If all of the above are excluded as an option then it is time to consider your options in relation to your financial circumstances moving forward.
If the amounts due to HMRC are your only significant liability and you DON'T have a proven track record of not paying HMRC, you may be able to apply for a time to pay arrangement. This can give you a few extra months to make the payments and can encourage HMRC to waive a number of penalties.
Follow the link to find more information in relation to time to pay arrangements, or for more tailored advice contact one of our business rescue experts directly.
If being unable to pay the self assessment on time is only the tip of the iceberg and you have bigger debt problems with more creditors than just HMRC, now is a good time to seek further information in relation to formal insolvency options. For example, for sole traders, a sole trader Individual Voluntary Arrangement might be a suitable option worth considering. If you would like to talk it through with one of our business rescue experts in the first instance, get in touch.
Above all, whatever your situation, keep these key points in mind:
As well as the financial outcome HMRC will consider your other actions including compliance and engagement when considering compromise agreements. Therefore, our advice is simple: keep HMRC up to date, ASAP, and it will benefit you in the long term. Even if you think you might have a query, don't leave things until the last minute. Recent figures showed that the HMRC contact centre telephone queue time averages around 35 minutes, and the later you leave it, the busier the phone line gets.