AN3928 Week 2 Lecture

AN3928 Business and Corporation taxation Adam Hughes


AN3928 Week 2
Tax administration and Ethics:
Tax returns:
-​ Under the self-assessment system, an individual may be required to submit a tax
return giving details of his taxable income and gains for a tax year.
-​ At around the end of each tax year, HMRC issues tax returns and/or notices to file
taxpayers who are likely to need to file a return such as sole traders and high
rate/Additional rate taxpayers.
-​ If a tax return or notice to file is not automatically issued, the individual must notify
HMRC by 5 October following the end of the tax year unless:
1.​ There is no capital gains tax liability.
2.​ No higher rate or additional rate tax is due.
3.​ Either all of the income is covered by the personal allowance, or all of the
tax due has been deducted at source, e.g. under PAYE.
-​ If notification of self-employment has already been given to HMRC for NIC
purposes, it is not necessary to make a separate request for the issue of a tax
return.
-​ If a taxpayer fails to notify HMRC, a penalty will be payable.

Full tax return:
-​ A full tax return (SA100) consists of a summary form, additional pages dealing with
different income and gains, and a tax calculation section.
-​ The individual must complete the summary form and such supplementary pages
as are relevant.
-​ Completion of the tax calculation section is optional.
-​ If the taxpayer does complete the tax calculation, this is called a self-assessment.
-​ Alternatively, the taxpayer may ask HMRCC to calculate the tax liability.
-​ This is still treated as a self-assessment by the taxpayer, not an official assessment
by HMRC.
-​ The due date for submission of the tax return is determined according to whether
a return is submitted on paper or online.
-​ Online return: 31st January following end of tax year or 3 months after return was
issued,
-​ Paper return: 31st October following the end of the tax year or 3 months after the
return was issued.

, AN3928 Business and Corporation taxation Adam Hughes




If a taxpayer is sent a return by HMRC it must be submitted to HMRC by the due
date even if there is no income to declare.
There are penalties for late submission:
-​ Initial penalty £100.
-​ 3 to 6 months late, a daily penalty of £10 per day.
-​ 6 to 12 months late, 5% tax-geared.
-​ More than 12 months late, further tax-geared.

Example 1:
Jane was issued wth a tax return for 2021/22.
By what date should jane submit her tax return to HMRC if:
a)​ The return was issued on 10 April 2022 and Jane wishes HMRC to compute her tax
liability and submit a paper return.
b)​ The return has issued on 12 December 2022, Jane wishes to compute her tax
liability and submit an electronic return online.
c)​ The return was issued on 14 October 2022, Jane wishes to compute her tax liability
and submit a paper return

Solutions;
a)​ Paper return: Later of 31 October or 3 months after return was issued, i.e. 10 July
2022 (Answer = 31 October 2022).
b)​ Online return: Later than 31 January 2023 or 3 months after the return was issued,
i.e. 12 March 2023 (answer = 12 March 2023).
c)​ Paper return: Later than 31 October 202 or 3 months after the return was issued,
i.e. 14 January 2023 (answer = 14 January 2023).

Short tax returns:
-​ HMRC aims to send taxpayers a short tax return if they are:
1.​ Employees (not directors).
2.​ Sole traders with a turnover of less than £85,000 (the VAT registration limit).