Self-assessment and compliance

Tax return filing dates

Tax returns for 2007/08 onwards made on paper will have to be filed by 31 October. So a 2007/08 paper return will have to be filed by 31 October 2008. The date will be the same for taxpayers who want HMRC to calculate their tax liability (currently 30 September). The present filing date of 31 January will remain for returns filed online.

Taxpayers will still be able to amend a tax return by the first anniversary of the 31 January filing date, whether the return was filed online or on paper. The new dates apply to returns filed by individuals, partnerships and trustees.

Tax enquiries and incorrect returns

The period during which HMRC can enquire into tax returns will be one year from the date HMRC receives the return, instead of one year from the fixed filing date. The change will apply to tax returns for 2007/08 onwards for individuals, partnerships and trustees, and to accounting periods ending after 31 March 2008 for companies.

There will be a single new penalty regime for incorrect returns for income tax, corporation tax, PAYE, NIC and VAT. Penalties will be determined by the amount of tax understated, the nature of the behaviour giving rise to the understatement and the extent of disclosure by the taxpayer. The new rules will apply from a date to be set, expected to be for return periods starting after 31 March 2008 where the return is filed after 31 March 2009.

The rules in the Police and Criminal Evidence Act 1984 (PACE) will be extended to all HMRC’s criminal investigations in England and Wales from a date likely to be later in 2007. At present, PACE only applies to former Customs and Excise matters. Similar legislation will apply to Northern Ireland, and new and consistent powers will be introduced in Scotland.

Tax Tip Get paid for filing tax returns over the internet. If you have fewer than 50 employees and you submit your 2006/07 end of year PAYE return to HMRC using the internet, you will receive a tax-free cash incentive of £150. The incentives for the next two years will be lower. If you make your monthly PAYE payments to HMRC by bank transfer, you benefit from an extra three days to pay the funds into HMRC’s bank account. Filing your VAT return online will not provide a cash incentive, but you do get up to 10 extra days in which to settle your VAT bill.

Online filing and tax payments

All taxes for which HMRC is responsible will be subject to a single set of powers to make regulations to require online filing and electronic payment. Eventually, most businesses will be covered. HMRC will be able to make regulations under which cheque payments of VAT and corporation tax will be treated as made when funds have cleared into HMRC’s account.