Brexit Likely to Cause Delay in Tax Returns
UK accountants are concerned that focus on Britain's exit from the European Union might lead to huge delays in tax returns being submitted in time.
Today marks the day that the UK finally leaves the EU. It also marks the day where all self-assessment tax returns are due, and many in the accountancy sector are concerned that focus on Britain’s exit from the European Union might lead to huge delays in tax returns being submitted in time.
Last tax year, 704,000 returns were submitted on the deadline day, while another 477,000 returns were filed late. Even though the time is running out, there are still some things that taxpayers can do before the clock hits midnight on Friday. TaxScouts, a specialist tax returns company, gave us their advice for anyone who still needs to get their returns done during the Brexit melee:
1. Register with HMRC as soon as possible
- If this is your first time filing a self assessment return, registering with HMRC can take a few weeks. You can either do it yourself on HMRC’s website or, if that seems too confusing, use a self assessment registration service like the one at TaxScouts.
2. Make sure you’re filing for the right tax year
- The current tax return deadline is for activity from April 6th 2018 to April 5th 2019, so if you’ve only just become self-employed or started earning income from renting a property (since April 6th) you don’t need to file yet.
- Make sure you understand how the UK tax year works.
3. Don’t get held up sorting documents
- Don’t delay filing your return because you want to get all of your documents ready first.
- If you’re self-employed, and if your expenses are under £1,000, don’t even worry about it. Just claim the easy-to-use £1,000 Trading Allowance. No docs needed.
- If you’re not self-employed, there might still be some allowances that are higher than the expenses that you were thinking about claiming.
- If you have high expenses but for some reason or another can’t find the receipts right now, just remember that HMRC doesn’t actually ask you for them right away. Only when and if you get audited.
4. Don’t put it off because you’re afraid of a large tax bill
- Adding fines and penalties to a large tax bill won’t make it any smaller. Complete and submit your return before the deadline to avoid a late-filing penalties.
- HMRC has payment plans available if you can’t afford to pay your bill all in one go. Call them and explain your situation – they can usually help you figure out a solution where you pay a little bit every month and avoid penalties.
5. Calculate your tax bill
- If you’re self-employed, HMRC will ask you to pay 50% of the estimated future tax bill in advance. This is called Payment on Account. They’ll assume that next year you’ll earn and spend pretty much the same as this year.
- Moving forward, every year you pay 50% in January and 50% in June, which actually helps soften the blow.
6. Remember: you can amend your tax return later if you don’t have all paperwork ready
- If you’re struggling to find lost receipts or documents, just submit your return with your best estimates before the deadline to avoid late-filing penalties.
- When you do find the receipts or documents you needed and find that your figures have changed, you can file an amendment to your tax return with no penalties.
Although it might not seem that Brexit and delays in tax returns are linked, historically many tax returns are filed late and HMRC struggled to cope with the workload in 2019, something experts foresee happening again this year. Previously HM Revenue and Customs (HMRC) has issued warning letters in February following each January deadline. However, in 2019, many of the warnings weren’t sent until late April. The delays were being caused by the heavy workload currently being shouldered by civil servants due to Brexit preparations.
If this happens again, HMRC claimed last year that no one will be “unfairly penalized” and accountants hope this will be the case once more despite Brexit Day and Deadline day sharing the same January 31st calendar space.