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clock aand calender Your Tax Return  The clock is ticking down!

Are you one of 6m?

The countdown has started for the nearly six million taxpayers who still need to file their tax returns before the 31st January self-assessment deadline.

Yesterday, HMRC announced that out of the 12m taxpayers who have to file a tax return, just under half still need to do so before the end of the month. The start of a new year should come as a wake-up call for taxpayers to meet the deadline as unlike the past couple of years, HMRC is highly unlikely to waive late-filing penalties and the late payment interest rate is set to rise significantly too.

The call for taxpayers to submit their tax returns before the deadline comes as 42,500 clearly had this as their New Year’s resolution and filed theirs between 31st December and 1st January.

Your Tax Returns: Déjà vu

The number of tax returns still to be filed mirrors the exact number this time last year. In 2021 HMRC had received just over six million tax returns and was waiting on almost the same number to come in. However, taxpayers and accountants had a reprieve from the usual 31st January deadline stresses after HMRC waived late filing penalties until 28th February for the second year running, due to the Covid pandemic squeezing capacity levels for accountancy firms.

However, the number of people filing tax returns over the Christmas period was down on last year where 33,467 filed on New Year’s Eve and 31,271 were filed from Christmas Eve to Boxing Day. While accountants and taxpayers have moved on from the Covid workloads, they are instead facing other challenges brought on by the cost-of-living squeeze and growing pressures from the economic downturn.

Your Tax Return: HMRC is no longer Mr Nice Guy

Dawn Register of the major accountancy firm BDO has warned taxpayers to not expect the same generosity and goodwill from HMRC this year as the tax authority is getting tougher on recovering tax debt. “During the pandemic, HMRC did show a fair amount of forbearance. Taxpayers were allowed to defer self-assessment and VAT payments, there was a moratorium on creditor-led insolvency action and HMRC temporarily suspended proactive debt collection activity.

“The result was that tax debt ballooned. Whilst the Revenue has worked hard to reduce this, the latest figures show total tax debt currently stands at £47billion. That’s more than double the pre-pandemic level at the end of March 2020 when tax debt was £19bn. As a result of this huge increase, HMRC’s debt management teams will be under considerable pressure to bring in the cash.”

Register also warned that HMRC is unlikely to waive late penalties this year and those that pay late will also be hit with a much higher interest charge, which is set to increase to 6% from 6th January 2023.

Your Tax Return: Accountants set to burn the midnight oil

With the deadline fast approaching and just as many taxpayers left to file as previous years, accountants are feeling even more frazzled this January with the news that the Agent Dedicated Line will be restricted to only “complex” queries, leaving those needing to speak to HMRC having to either get their answer using the self-serve digital channels (which anecdotally are close to useless) or waiting for extended time on the normal customer line, with waits already averaging over 30 minutes.

Despite reminding clients at the start of October letter to bring in their records within three months i.e. by Christmas, at MJ&Co we have found that around 10% of our clients don’t seem to be in any rush, which I find very depressing. To make it worse, I have found that most of the late arrivals also tend to turn up with incomplete records when they do arrive.

The biggest area of missing records tends to be bank information. It’s left me wondering, what is so difficult about finding out what your year end is and then printing off bank statements for a whole year?

Your Tax Return The usual suspects

If I had sat down 3 months ago and written a list of which firms and individuals, I expected to bring their records in with just a few days left until the deadline of 31st January, I’m sure it would have been 90% accurate.

What we have found that the laggards are invariably the usual suspects, which anecdotally is the same for most accountants.  I fail to understand how our warnings that fines will not be waived or tax payments can’t be deferred, goes right over the heads of this recalcitrant few.

Tax Accountant’s view

Writing this Blog today strikes me as a classic case of Déjà vu, as it starting to be a regular annual event, but I’m not letting it get to me this year. Instead, when the usual suspects stagger through our door this January, they will be given a simple message from me. I am not working to midnight on deadline day just because you couldn’t be bothered bring in your records on time, or will I?