Tax returns

Richard Mannion, national tax director, answers questions about tax returns.

Question

In January this year I gave up a permanent job as a local newspaper reporter to go freelance. I am preparing to file my tax return online and understand that 30 December is the deadline. Is this correct and what are the key points to remember?

Richard Mannion, national tax director, says:

Answer:

The 30 December deadline applies to employees and not to the self employed. Had you completed a paper tax return by 30 September 2007, HM Revenue & Customs (HMRC) would have calculated your tax for you. Unfortunately, this option is no longer available to you for this year, although if you file your tax return using the internet, the software will calculate your tax liability.

When you set up your business, you should have notified HM Revenue & Customs (HMRC) within three months of starting your business. If you have not done this, you face the possibility of a £100 penalty. You need to complete form CWF1, which is available on the HMRC website, and this will set you up as a self-employed person for National Insurance purposes.

You are liable to pay tax for the tax year 2006/07 but if you did not receive a tax return, you should have notified HMRC by 5 October 2007. If you did not meet this deadline you are potentially liable to another penalty. However, this penalty can be avoided provided that the whole of your tax liability is paid on or before 31 January 2008.

HMRC expects self-employed individuals to keep adequate records showing all business transactions. You should download booklet SA/BK4, available on the ‘Leaflets and Booklets' page of the HMRC website. Alternatively, a copy can be obtained by phoning the Orderline on 0845 900 0404.

For further information, contact:

Richard Mannion is national tax director at accountants and investment management group Smith & Williamson

tel: 020 7131 4252
e-mail Richard Mannion 

PR enquiries:

Layisha Laypang, tel: 020 7131 4550
Kate Harrison, tel: 020 7131 4228

Disclaimer

By necessity this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Article correct at time of writing.

Note to editor

Smith & Williamson is an independent professional and financial services group employing over 1,400 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-size corporates. It operates from offices in London, Belfast, Bristol, Glasgow, Guildford, Maidstone, Salisbury, Southampton and Worcester.

Smith & Williamson Limited

Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International, a worldwide network of independent accounting firms.