‘Laggard’ contractors urged to file now as Jan 31st tax deadline looms
“Stragglers,” “laggards,” “silly monkeys” -- three names which accountants are affectionately calling contractors yet to pay HMRC or file their returns ahead of the January 31st deadline.
Using more formal terms, HMRC confirmed yesterday that 3.4m “customers” were still to join 8.7m self-assessors who have filed and paid, saying they must do so by a week yesterday.
But that doesn’t mean submitting the tax return or accounts on the very day of the deadline, reminds chartered accountant Mark Stewart, clearly speaking from experience.
Indicating that some people take the 31st cut-off far too literally, the founder of Stewart Accounting Services said leaving things to the last-minute “is not okay.”
Taking to LinkedIn with a medley of tax return ‘not okays’, Stewart was met by fellow advisers wanting to clarify that it wasn’t them who are leaving matters until the 11th hour.
Follow-up threads went further, hailing accountants to contractors and other self-assessors as “miracle workers” -- a modest upgrade on “agents,” as HMRC refers to accountants as.
But one tax expert did have a pop at his own kind, attacking the “snobbish attitude” from some accountants claiming that they are too proactive to deal with returns past December.
“They think they are better than the others [of us who do accept returns post-December],” poked the expert, Johann Goree, boss at OnPoint Accounting Group.
'Just a single day late lands you £100 HMRC penalty'
A book-keeper pointed out that the flurry of VAT returns in December is why, ideally, their firm would “like” as close as possible to “99% of self-assessments done by 31/12.”
Other tax advisers say that with a three-day processing time on Bacs payments to HMRC, and inevitable site maintenance or downtime just as they log-on, even the days running-up to Jan 31st represent a gamble.
“Anyone yet to submit their tax return… [should note that even just] a day late submitting…will incur an immediate penalty of £100,” warns SJD Accountancy’s Joanne Thorne.
“Alongside penalties for sending your tax return late [at increasing amounts at three months; six months and 12 months late], there are also penalties for paying your tax late.
“And if you are 30 days late, you’ll have to pay 5% of the tax owed at that date, at six months you’ll pay a further penalty of 5% of the tax owed at that date, and a further 5% if you have still not paid at 12 months.”
'Pay at least a portion'
SJD’s technical compliance manager, Thorne added: “With this in mind, it’s advisable to pay at least a portion of the tax owed -- as much as you can afford -- to help reduce the overall bill and thereby reduce the penalty charge.”
To help some limited company directors who despite their best efforts with ‘miracle workers’ will still end up filing late, Thorne is prepping some advice exclusively for ContractorUK.
And based on an overview published separately today on what PSC contractors struggle with when self-assessing, advice looks much-needed.
'Avoid risk, act now'
Penned by Louise Rayner, owner of NumberMill Accounting, the overview cites 12 areas of accountancy rules, HMRC regulations and self-assessing which often flummox directors conceptually, practically and financially.
Fortunately, with penalties in the offing, HMRC’s “primary focus is on those who persistently fail to complete their tax returns, or those who are deliberately evading tax,” says Pendragon Consultancy.
Nonetheless, the consultancy’s boss Janet De-Havilland echoed the consensus: “Avoid risk, by not leaving it too late to file your tax returns,” she said.
'Laggards, silly monkeys and stragglers'
Or just act to simply avoid being labelled -- even if it is affectionately. In fact, asked to provide tips to ContractorUK readers ahead of the 31st deadline, one veteran tax adviser said he would if it wasn’t for the many “laggards” keeping him busier than usual this year.
Another tax firm specialising in contractors, Acumenica Group, posted this week: “Still space in the schedule for any of you silly monkeys that haven’t done your SA returns yet!”
To his followers, finance adviser Neil Criddle said similar: “We’re almost done…bar a few stragglers, and have capacity over the next couple of weeks to get any last-minute returns in.”
Such updates might allay contractors’ fears that even if currently sat staring at an incomplete tax return, there’s still hope.
Partly, that may be because tax return season might no longer be what it once was -- at least in the busyness stakes.
Acumenica accountant Alison Halliday explained: “Despite what appears to be a common misconception, this month is no busier than any other for us. In fact, I would say December was busier just because it was a short month due to holidays.
“However, I do wonder if people are holding back, particularly as I have had a couple of emails beginning with ‘Sorry to bother you at this busy time…’, and ‘I know it's a busy month for you guys but…'”
Writing this week, Halliday added: “[So] if you have a question, please don't put it off because you think [your accountant] might be too busy to reply…service levels [hopefully] don't drop just because there's a tax return deadline looming.”