hmrc Articles

With little more than a week to go before the self-assessment tax deadline hits, it is worth double-checking whether or not you have to submit a tax return.

If you have to send a tax return and you miss the 31^st January deadline then you will be penalised. If your tax return is less than three months late then you’ll have to pay a fine of £100, but this figure can rise quickly if you submit a return after three months or you pay your tax late.

For certain groups like company directors, it is pretty obvious that you will have to pay. But there are some complicated rules that you might not have taken into account.

If you are an umbrella contractor with Umbrella.co.uk, then as a rule of thumb you won’t have to submit a tax return, but there are some circumstances that may contradict that. 

HMRC has narrowly lost a First Tier Tribunal (FTT) case, in which the tax authority tried to make an employee pay outstanding PAYE liability on a bonus paid just before the company went into liquidation. And the case could have important consequences for some owner managers.
Unless it is appealed by HMRC, the tribunal could mean that more small business owner managers that are about to go into liquidation could make payments to themselves without paying all the tax liability to the crown.

If the reforms go ahead, then public sector bodies and agencies would be responsible for deciding whether a contractor qualifies for IR35 restrictions. This differs from the current system where intermediaries like individual limited companies (commonly known as personal service companies) or umbrella companies decide IR35 status.

Experts believe that this will result in more public sector contractors being ‘caught out’ by IR35 legislation. Some fear that even the most independent contractors are at risk of paying more tax because of difficulties proving the absence of IR35.

New government plans for ‘digital tax accounts', that could see contractors forced to update their tax information every quarter, have been snubbed by a bureaucracy watchdog that works with HMRC.

In a report published earlier this month, the Administrative Burdens Advisory Board (ABAB) predicted that plans announced by George Osborne – including mandatory quarterly tax updates – would create too large a burden on small businesses.