My tax affairs are not up to date. I have been meaning to get all my overdue tax returns submitted as I'm worried that perhaps this could trigger an investigation which would be very stressful and costly. HMRC seem to be encouraging taxpayers in my position to come forward and get their outstanding tax returns completed and submitted, under very favourable terms. How can I take part in this campaign?
HM REVENUE & Customs (HMRC) have recently launched a campaign to persuade taxpayers to submit their late tax returns for 2011/2012 or earlier years.
The campaign, which was launched in July, has been called 'My Tax Return Catch Up Plan'. In common with other campaigns it provides a window of opportunity in which to sort out tax affairs on the best possible terms available from HMRC. This new campaign will run until October 15 which is the date all outstanding tax returns must be submitted and also the due date for paying any tax which is overdue. If you can't pay all of your outstanding tax by that date you can request a time to pay agreement which, if approved, will allow you to spread the late payment over several months. If you discover that you are due a repayment of tax for previous years you should also claim this by October 15.
You can reclaim tax for years 2009/2010 and later years, however, in most circumstances it is now too late to submit a reclaim of tax for years earlier than 2008/2009. The 'My Tax Return Catch Up Plan' campaign is specifically targeted at individuals who have received a notice to complete a self-assessment tax return from HMRC for any year up to 2011/2012 and who have not yet taken any action to do so.
However, if you are already the subject of an investigation, enquiry or compliance check you are not eligible to take part. There are a number of incentives offered to individuals taking part in this campaign. By taking part in the campaign you will be given an opportunity to bring your tax affairs up to date without the associated costs, stress and anxiety of a tax enquiry. HMRC always look favourably on taxpayers who voluntarily come forward to disclose untaxed income and this reduces the chances of receiving a high penalty.
There are various ways in which you can take part in the campaign. Firstly it is necessary to advise HMRC that you wish to join. This can be done online, by phone, by post or by appointing a tax professional to do act on your behalf. Once you have notified HMRC, you will then be required to complete and submit all your outstanding tax returns. An appointed tax agent can assist you with the completion of your tax returns, preparation your tax calculations and the claiming of any tax reliefs you may be entitled to. Finally, you will be required to pay what you owe or claim a repayment if you have overpaid tax. If you don't join the campaign and you have outstanding tax returns, HMRC may use its powers to estimate the tax due and seek payment of the estimated tax through tax demands, telephone calls, personal visits and ultimately using the courts. HMRC may also seek tax geared penalties of up to 100 per cent of the tax due for late returns where individuals do not take advantage of this opportunity. In some circumstances the penalties can be as high as 200 per cent of the tax due for offshore matters which are not disclosed. In the most serious cases HMRC may consider a criminal investigation into the taxpayer with a view to prosecution. It may be tempting to continue to ignore the un-submitted tax returns but it is always better to come forward and declare untaxed income to HMRC rather than wait for them to come knocking on your door.
? Janette Burns (j.burns@fpmca.com) is tax partner at FPM Chartered Accountants (www.fpmca.com). The advice in this column is specific to the facts surrounding the question posed. Neither The Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.