Attacks on your income
It was brought to my attention that the words 'exact coin toll' can be rearranged to form 'tax collection' and that the phrase 'exact monies' is an anagram of 'income taxes'.
Whether this is coincidence or not, there is little doubt that these phrases sum up the aims of the Inland Revenue's Self Assessment system, introduced in 1996. Since then, a lot of dentistry has been applied to a multitude of teething problems. But while the Inland Revenue appears to be getting its act together, evidence shows emphatically that the 'customer' is not.
Procedures under the old tax system seemed far more logical, but they were also responsible for an apathetic approach from the taxpayer.Over the years the tax office adopted an avuncular stance, and was frequently met with indifference as a result. But no longer. The Inland Revenue now prides itself on being a modern-day, no-nonsense business.
Self Assessment puts the onus firmly on the individual taxpayer to get their tax information in - and to get it right. The Revenue's main objective in adopting it is basically to ensure that the correct money is paid by the correct time. Failure to do so can result in hefty penalties, interest and surcharges.
As all self-employed architects fall under the umbrella of Self Assessment, and all employees who are liable to the higher rate of tax will be obliged to complete an annual tax return, the following may serve as useful reminders.
These are normally issued in the first two weeks of the financial year, between 6-20 April. If you usually receive a tax return, or believe that you should complete one but it has not been sent to you in April, you should phone your tax office and ask for one.
Depending on your circumstances, a variety of supplementary pages are issued, such as employment, self-employment, partnership, land and property and capital gains.
If the tax return you receive does not contain the pages that are appropriate to you, it is up to you to phone the number shown on your return and request whatever you need.
If you want the Revenue to do your calculation for you, the completed return must be received at your tax office by 30 September. This will enable the Revenue to process your return and tell you what tax you owe before the due date of 31 January.
For returns sent back after 30 September, the Revenue will still do the calculation if required. You should bear in mind, however, that there would inevitably be a backlog of returns by this time, which are dealt with in chronological order. In these cases the Revenue will give no guarantee that it will do your calculation in time for you to make payment by 31 January.
The returns issued this month are for the year ended 5 April 2001. Any tax due will be payable by 31 January 2002. If full payment is not received by that date, interest is charged on any balance outstanding.
So if you send your return in after 30 September it would be prudent to estimate what you are likely to be charged, using the tax calculation guides that accompany your Return.
If you have not received the Revenue's own calculation by the beginning of December it would be advisable to make payment of the amount you have estimated before 31 January.
This will minimise the interest arising on any unpaid balance.
These encourage prompt payment.
An initial surcharge is imposed when the balancing payment is still unpaid more than 28 days after the due date.
A second surcharge is imposed where any tax (and Class 4 National Insurance contribution) is unpaid six months after the due date for payment. The surcharge itself is 5 per cent of any tax plus Class 4 NIC unpaid, 28 days after the due date.
Returns are due back by the filing date, which is clearly explained on the front of each form.
It is your responsibility to make sure you meet the deadlines. Failure to do so will result in a £100 fixed penalty, imposed if the completed return has not been received by 31 January. A second penalty of £100 is imposed if it has not been received six months later (31 July). Bear in mind that the only thing interest is not charged on is interest itself.
Depending on the extent of your tax bill, you might be required to make interim payments or 'payments on account' for the following year, each calculated at one half of the preceding year's bill.
These are payable by 31 January and 31 July. Interest is charged on any amounts still outstanding once these due dates have passed.
If all this seems complicated, it need not be. If you have an accountant acting they will know the rules and regulations and should advise you accordingly. Otherwise, you can always phone your tax office, or even pop in and see them. The Inland Revenue will still offer advice or talk you through any problems - and for free!
Lloyd Williams is an independent tax consultant