Landlords Tax Return Deadline 2008 / 2009

“In this world nothing can be said to be certain, except death and taxes.”

Benjamin Franklin in a letter to Jean-Baptiste Leroy (13 November 1789)

And so it has been for many years. What this means is, if you as a landlord have not already filed a paper return for 2008/09 the deadline for returns filed on-line is 31st January 2010. After this time your late submission will incur an automatic penalty of £100. If the tax return is still outstanding by 31 July a second £100 fine is incurred. A penalty can also be imposed based on the amount of tax owed for the year if returns are still overdue 12 months after the filing date.

So why do we always leave it until the last moment? Perhaps there is never enough time and often not enough money – and for many they almost but don’t quite understand what they are doing. So here are the basics:

SELF ASSESSMENT

• HMRC no longer “agree” figures
• Get it right, and on time – or pay the price
• Nine million Self Assessment tax returns now filed each year
• 104,000 tax returns filed on-line on 31st January 2007 – before the HMRC computer crashed
• 900,000 tax returns are filed late each year
• Increasing pressure to file on-lineKeep your records or risk a £3,000 fine

The principle is quite simple. You should know whether or not you have a source of income that is untaxed or not taxed at the right rate. If this is the case you must tell HMRC by 5th October following the end of the tax year in which the income first arose unless you have been sent a tax return to complete.

If the taxable income is less than £2,500 and you are in employment HMRC will collect the tax through the PAYE scheme. But you must write and tell HMRC the amount. If the income exceeds £2,500 HMRC will send you a tax return. Once you have a tax return you have until the later of 30th September and two months after the return was issued if you want HMRC to calculate the tax due, and 31st January and three months after the return was issued if you want to calculate the liability yourself. In any event you have until 31st January in the year following the end of the tax year to pay any tax due.

In the 2007 Budget, Gordon Brown announced that he’d accepted the recommendations of Lord Carter – in his review of HMRC’s online services – and from 2007-08, has brought forward the deadlines for filing self-assessment tax returns from January 31 to September 30 for paper returns. The deadline for returns filed on-line remains 31st January.

On top of the automatic penalty of £100 charged for returns not received by 1 February, if the tax return is still outstanding by 31 July a second £100 fine is incurred. A penalty can also be imposed based on the amount of tax owed for the year if returns are still overdue 12 months after the filing date.

The tax year runs from 6th April one year to 5th April in the next. The first payment is made in January during the tax year and is one half of the liability for the previous year unless the liability for the previous year was under £500. Assuming your return has not been submitted and processed by 31st July, the second instalment is due on that date and is the same amount. You are required to submit your return by 31st January following the end of the tax year together with any balancing amount of tax due (on-line filing only).

Interest is charged on tax paid late. This applies whether the late paid tax is either of the two payments on account or the balancing payment.

Records of all information used to complete tax returns must be kept for 22 months after the end of the tax year, or for 5 years and 10 months for those carrying on a business or who have income from letting out property. There is a maximum penalty of up to £3,000 for each tax year for which records have not been kept.

Help is at hand

If you feel this is all too complicated then we at Landlords Tax Services will be pleased to help, email us on maurice@landlordstax.co.uk  phone +44 (0)20 7510 9696 or visit www.landlordstax.co.uk

Copyright Maurice Patry FCA

December 2009.

This article is published without responsibility on the part of the author for loss occasioned by any person acting or refraining from action as a result of any view expressed therein.