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Meme bird: The early bird pleases the taxman

HMRC urge taxpayers to put their tax returns in ASAP

HMRC have recently launched their annual summer campaign, which urges taxpayers, who complete a Self-Assessment (SA) tax return, to file it early (this of course, assumes that you don’t need any help).

HMRC’s announcement this week, encouraged taxpayers to “beat the January rush” and file their SA tax returns early. Myrtle Lloyd, HMRC’s director general for customer services, said in a press release this week: “Given that January is the busiest month for HMRC’s phone lines, I urge customers to check out the tips on filing your tax return early on GOV.UK and to consider doing so themselves asap”.

Ms Lloyd added: “……filing early will allow taxpayers to plan, budget and access help in good time if they need it”. This particular nugget of advice is rather impeccably timed, coinciding as it does with the closure of the SA helpline from 12th June until mid-September 2023.

I fully accept that there are clear benefits from getting your tax affairs in order and the 2022/23 tax year done and dusted in good time, however, HMRC’s press release will do little to alleviate the increasing frustrations among taxpayers and their accountants around sub-standard service levels at HMRC.

Self-Assessment Sooner: Why file early?

Apart from the blindingly obvious, i.e. knowing the exact amount of tax you will need to pay, which is clearly useful for planning and budgeting purposes, there can also be a financial incentive to filing early. If you expect your income in the current year to be less than in the previous year, you can opt to reduce your payments on account (POA) when filing. As the second POA date falls on 31st July, there could be a significant benefit for those taxpayers in getting it tied up now.

If cashflow is an issue, as it is with many small businesses, and you haven’t met the 31st July deadline, you do have a small window of opportunity to lower the POA due, providing you do so before the end of August. You will not suffer a surcharge but you may be charged a small amount of interest.

But beware, if you don’t expect your earnings to reduce, but request for your POA payment to be reduced simply for short-term cashflow gains, backdated interest will be applied to any missed tax revenue for POAs reduced without a good reason when you file your next tax return.

The recent series of interest rate hikes by the Bank of England (BofE) have had the knock-on effect of big rises in interest on late payments. HMRC charges 2.5% above the BofE base rate, which now stands at 5.25%, so penalties are currently at a 15-year high of 7.75%, up from just 3% a little over a year ago.

Self-Assessment Sooner: Avoid the January rush

It is a perennial problem, despite the best of intentions, many taxpayers leave it until the last few days before the 31st January deadline to file tax returns (although thousands decided that Christmas week was the perfect time to file for last year) so January is always a very busy month for the helpline.

What is somewhat disingenuous by HMRC is their assertion that taxpayers filing early will be able to access help and support in advance of the ‘January rush’. HMRC are rather ‘extracting the urine’ by not mentioning in their announcement that their telephone helpline has been arbitrarily shut down over the summer without any consultation whatsoever. So, it’s likely that as well as a January rush we will also see an autumn rush when the helpline will be groaning under the weight of a three-month backlog.

Also spare a thought for those taxpayers who are digitally excluded and must file their SA tax returns via a paper form. With paper returns having a deadline of 31st October, they would have a maximum of just six weeks to resolve any queries once the helpline is up and running again.

Self-Assessment Sooner: Is there any help available at the moment?

HMRC’s press release states: “The self-assessment helpline is temporarily closed and will reopen on or shortly after 4th September 2023. Around two-thirds of all calls can be resolved by customers themselves online on GOV.UK. Additionally, customers can ask for help from HMRC’s digital assistant or chat with a webchat adviser.”

Satisfied that help is indeed available? I thought not, as anyone who has attempted to converse with the “digital assistant” chatbot in the past will know that you are usually sent on something of a wild goose chase, usually ending up at a webpage containing a generic tutorial. These can sometimes be useful, but only if your query is box standard. Eventually, if your issue has not been resolved the inevitable message pops up to remind you that: “our advisers are not available to discuss your query at the moment.”

The only positive news is that the Accountant Dedicated Line (ADL) will remain open for queries, including those relating to self-assessment whilst the public helplines are down. Therefore, taxpayers with more complex accounts might consider appointing an accountant to undertake their tax return filing.

Accountant’s view

My advice to taxpayers is to try and file your tax SA tax return early, if at all possible. However, if you can’t do so without some expert advice, accountants up and down the land are waiting for your call!