January 31st was the deadline to file your tax return in the UK.
The good news is that each year more people are actually submitting the returns on time Last year a record was set - nearly 11 million people got their annual tax returns by midnight on January 31, with nearly 33,000 filing online just an hour before according to the UK’s tax authority.
But for every person that made the deadline, there's plenty of others that didn't.
It's estimated that one in 14 tax payers didn't file on time last year. While it's too early to assess what the numbers were like this year, what is certain is that submitting a late tax return is a costly affair - especially for small businesses.
An automatic fine of £100 pounds is generated by computer after January 31st - and the later that people wait, the greater that number increases. If you're three months late, there's a £10 fine for each following day up to a 90 maximum of £900. Six months later or more and you could be asked to pay up to 100% of the tax due instead as well as any tax owed, which is doubling the payment you were originally asked to pay.
Paying your tax return on time is probably what most SMEs aim for but maybe it's not procrastination that is the cause of the delay, but the actual process of filing the return in the first place.
Going online and navigating through the government portal can be confusing and frustrating. There are also requirements to provide a host of information and ID, which takes time as well. Add to the mix the need to supply a Unique Transaction Reference (UTR) and suddenly you find yourself running out of time as you scramble to locate where and what this number is and why it matters so much.
Another serious issue is the struggle that most SMEs face: late client invoices. If small businesses are struggling each month to get paid - how will they file their tax return on time?
The Federation of Small Businesses asked government for some mercy, complaining that people have faced an unusually difficult year, which is impacting their ability to file their return.
HMRC estimates that nearly 11 million people have to complete a tax return because they are self-employed, earn more than £100,000 or have a second income.
For those firms that filed on time this year - a big congratulations are in order. For the millions that have missed the deadline – here are a few tricks to prepare for the next return:
First, be organised- keep paperwork sorted throughout the year so everything you need is in order and you're not panicking the day before the deadline.
Second, keep track of all expenses and include all the information required. Double check that forms are fully completed and include all earnings. Many tax returns are rejected by HMRC due to errors and mistakes so find the time to cross check all paperwork before you file the return.
Third, use the plethora of FinTech software that's readily available and can simplify processes. They include online platforms such as the Which? online tax calculator that helps businesses submit tax returns directly to HMRC with little hassle.
If all of this sounds too daunting, then there's always the final option and that's to seek out an accountant. That can be a costly affair but so too is the whole business of late tax returns.