Taxing time
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Hauliers who fail to send their tax return in by the end of this month face heavy penalties under the new system. Let CM'S simple guide take the headache out of completing those vital forms.
This year's tax return looks very different to last year's. The most obvious change is that now everything has to be done to deadlines—with penalties if it isn't. Your tax return has to be filed on time. Contrary to the rather misleading publicity by Inland Revenue last autumn, on time does not mean by 30 September 1997; it means by 31 January 1998. The tax has to be paid on time. It is payable in three instalments: the first on 31 January during the tax year; the following on 31 July and the balance on the next 31 January.
Why all the publicity for the 30 September date? Largely because the Revenue wants to spread its workload and did not want everyone sending in their returns in January. But also because that was the final date for those who cannot face up to calculating their own tax and wanted the Revenue to do it for them. I Iowever, where a return is submitted after 30 September it does not guarantee to work out the figure in time for you to make the payment due next January—or even to avoid the 50% surcharge that will be imposed on tax still outstanding at 28 February 1998. Returns submitted by about mid-November may be processed in time, but later ones may not.
Accounts
The law provides that the Revenue is deemed to be aware of information contained in your tax return or in any accounts, statements or documents accompanying it or which could reasonably be inferred from such items. This is important in the context of completing your tax return. The Revenue says it has designed the form to include all information it needs to deal with your tax affairs.
• Page 3 of the Tax Return Guide tells you not to send your financial records with your tax return. However, if you think that some of the entries on your tax return will look odd, you should send with the return whatever extra information you feel is necessary to understand those entries. Volunteering extra information will not only protect you from a discovery, it could mean that the Revenue does not select your tax return to inquire into if you explain in advance the points on which you think it is likely to ask questions.
The return itself consists of an eight-page "core" return plus, in most cases, one or more supplementary pages dealing with different types of income. It is important to realise that these supplementary pages are part of the return.
• Page 1 of the return is the statutory notice requiring you to complete the form.
• Page 2 is a series of questions to work out which supplementary pages you need. If you answer "Yes" to any of the questions you need the appropriate supplementary page— the coloured flash alongside the question identifies the page and it has a corresponding coloured strip at the top. Even if you have only one figure to go on a supplementary page you still need to fill it in.
• Page 3 deals with UK savings income. It is split into two parts, interest at the top and dividends at the bottom. Unlike the old return you need to enter the tax deducted as well as the income and for dividends you need to add together the dividend and tax credit as well as showing them separately. You can leave off the pence from your income figures and round up the tax and deductions to the next whole pound.
• Page 4 starts with income from pensions and social security benefits. It has a space for taxable maintenance income, gains from insurance bonds and refunds of certain pension contributions. Finally, it has a space for "other income". It would be sensible to give a breakdown of "other income" if it is from more than one source. If it is from only one source, a note of what that is can usefully be entered in the additional information box on page 8 of the form. Assuming that you have filled in the appropriate supplementary
pages this completes the income side of the return.
• Pages 5 and 6 deal
with relicts and allowances. These are more extensive than on the old-style return. This is because most claims and elections are now made in the return instead of being notified to the Revenue separately.
Capital gains have their own supplementary page. The Revenue does not want to see the calculation of the gains—unless it decides to inquire into the return. Nevertheless, consideration should be given to sending it.
• Page 7 starts with the tax calculation. Ignore this if you want the Revenue to calculate the tax. But if you are unfamiliar with the tax system it is probably safest to complete the Tax Calculation Guide worksheet. Question 19 is important if you have overpaid your tax. You need to tick both the box at Q19 and either that at 19.1 or 19.2 if you want the Revenue to send you the overpayment—otherwise it will write and ask you if you want it repaid or held against next year's tax. Question 21 asks for a daytime phone number. This too is important. If you make a mistake in completing the return and the Revenue's computer identifies that something is wrong but it is not readily apparent what the right figure should be the Revenue will want to phone and ask.
Finally, the most common mistake, surprisingly, is forgetting to sign the return. This needs to be done at the bottom of page 8.
71 by Robert Maas Robert Maas is tax partner of Blackstone Franks & Co, a leading City firm of Chartered Accountant&