Don't panic, but the tax self a ssessment deadline is looming
The annual cut-off for filing of tax self assessment forms is imminent, with idlers sure to receive a £100 fine from the taxman, cautions the Association of Chartered Certified Accountants.
Chas Roy Chowdhury, head of tax at ACCA, said: "This is a timely reminder for those who do their own tax self assess-ment to get their skates on and file their details on time.
"According to the Office for National Statistics, some eight million people now undertake their own self-assessment, effectively acting as their own unpaid tax collectors. Despite the HM Revenue & Customs' media campaign to file by the January 31 deadline there will still be those who will be late."
Indeed it is estimated about 890,000 will be caught out or make a mistake in calculating how much tax they owe.
He continued: "The question is, should those with legitimate reasons to file late - say, those with very complex tax issues, or those waiting for overseas information - be penalised?
"ACCA believes it's important that HMRC target persistent late filers, but there are those who have genuine reasons for late filing. They should be treated more leniently than persistent offenders."
Taxpayers are set to collectively hand over £418 million to HMRC this year for mistakes in filling out tax returns.
IFA Promotion, which supports the work of independent financial advisers, estimates people will be fined around £89 million for failing to return their form on time.
They also look set to hand over £308 million in fines for miscalculations and £21 million in surcharges for unpaid tax from previous years.
The total will be about £6 million more than was paid in fines and charges last year, when an estimated 879,000 people failed to make the deadline, the group said.
Meanwhile tax experts at accountants PKF (UK) have welcomed a Government initiative to simplify PAYE coding.
Notices are sent out annually by HMRC to over 20 million taxpayers.
Simon Littlejohns, tax partner at PKF in Birmingham, said: "This is definitely a step in the right direction. Statistics show that queries about tax code notices account for about 20 per cent of all inquiries made by customers to HMRC.
"Research showed a lack of understanding of the old notices."
A new form, known as P2, has been successfully piloted in the South West where customers liked the more personalised approach which shows how each customer's tax code has been calculated and also explains how the final code is reached.
Mr Littlejohns said: "A lot of phone calls in past years to HMRC were simply taxpayers ringing up to ask for an explanation of how their code was worked out."
The new form states what reduces the tax-free allowance and contains explanations in plain English of coding components in the same document.
Mr Littlejohns said: "While the new form should make understanding the tax code easier, anyone with a question about their code, or who needs to notify HMRC of a change in their circumstances, can still contact the office shown at the top of their coding notice.
"If you still do not understand how your code was calculated you should ensure that you are claiming the allowances to which you are entitled, and that you are paying no more than you need to."