Filing taxes is no one’s favourite thing to do. But it is a must-do all the same. And the HMRC penalties for tax return mistakes can be pretty hefty, so it is in your best interests to educate yourself about tax requirements and thoroughly check your Self Assessment returns before submitting them.
More often than not, however, we leave our returns until the last minute and then rush through the process to make the deadline. And it is only when you go over your returns later that you realise: “I made a mistake on my tax return.”
Luckily, it is not the end of the world. In this blog post, we offer an introduction to Self Assessment tax returns, common tax return mistakes to avoid, and what to do in case you have filed taxes wrong. As you will see, if you do it correctly, you may not have to pay any penalty. Let us dive in:
Self Assessment tax return requirements
You must complete an HMRC Self Assessment tax return if you have a personal tax bill in the current year. This also applies to limited company contractors, typically directors of their companies. You will also need to if you are earning over £50,000 and are in receipt of child benefit.
On your tax return, you must report the details of your taxable income, pay the tax you owe, and (if applicable) make payments on account. We always recommend working with a tax professional like Bradleys Accountants to help you figure these out and avoid tax return mistakes.
The first step is to register online for an HMRC Self Assessment account. This is where you can view your liabilities, due dates, payments made and payments due for any tax year.
The UK tax year extends from the 6th of April to the 5th of April of the following calendar year, and you need to file your returns by the 31st of January following the 5th of April.
We recommend filing early and carefully checking your submission so that you can spot and correct any tax return mistakes.
Examples of Self Assessment errors or mistakes
Those who have filed taxes wrong will typically have made one of the following tax return mistakes:
1. Incorrect UTR/NI
You need to correctly record your Unique Taxpayer Reference and National Insurance ID on your Self Assessment returns. Mistakes in either will void the submission.
2. Missing the filing deadline
This is one of the most common tax return mistakes in the UK, and it happens because people tend to leave this until the last minute. Be sure to keep all your documents handy, save as you go when filing online and keep plenty of time on hand to spot if you have filed taxes wrong.
3. Incorrect income reporting
You must include complete salary details, dividends, pension payments and other relief payments. It is also important to note that certain types of income, like betting/gambling winnings or lottery winnings, are not taxable, so including them will lead to Self Assessment tax return mistakes. If you are self-employed, here are tips to file tax returns.
4. Not including supplementary pages
You must include supplementary pages for certain types of income, including life insurance gains, share schemes, interest from gilt-edged securities, tax reliefs from investments in venture capital schemes, and so on. Ask your accountant for assistance with this.
5. Not signing and dating paper returns
If you submit your returns on paper, the deadline is the 31st of October (i.e. earlier than the online filing deadline), and you must date the returns accordingly.
Is there a deadline for making changes to a Self Assessment tax return?
If you are reading this and realising “I filed my taxes wrong”, it may not be too late to avoid a penalty. You will need to wait 72 hours after the initial filing, after which HMRC lets you fix tax return mistakes by submitting an amended set of tax returns with the correct details.
You must submit this within 12 months of the original 31st January deadline for the relevant tax year (if you submitted the original returns late, the amendment deadline is extended, too).
You must also file the amendment in the same format (online or paper) as the original. If you submit a paper amendment, you need to write ‘amendment’ on each page.
You can file a claim for overpayment relief if you have paid more tax than you owe. This must be submitted within four years of the end of the original tax year.
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How do I make changes to my tax return?
HMRC processes your tax returns into its system as and when you file them. There are no major checks at this stage. But if it comes out that you have made a mistake with your tax return, HMRC will notify you of the discrepancy and request an amendment. You can then file the new return as mentioned above.
However, HMRC would not be able to detect “innocent” mistakes like you checking the wrong box or inputting the wrong figure. This could lead to an erroneous overpayment at your end or a tax refund issued, which could, in turn, result in an inconvenience down the line or even a penalty to pay if the mistake is caught late.
It is vital, therefore, to avoid tax return mistakes as much as possible. The HMRC website offers some tax return toolkits that you might find useful. And as always, if there is anything you are struggling with, consult a professional.
I need to write to HMRC. What should I include?
In case twelve months have elapsed, and you realise you have made a mistake on a tax return already filed, you can write to HMRC and let them know about it. You will need to mention the year of the return, the amount you underpaid/overpaid and the reason for it.
In case of an overpayment, you will need to mention that you are looking to claim overpayment relief, include details of how you want to be repaid, proof that you have not already tried to claim the amount and a signed declaration that you have completed the returns to the best of your knowledge.
You must receive an amended tax bill within the next few days and pay as soon as possible. If your overpayment claim is accepted, you will receive the refund in your account within four weeks.
If you believe that HMRC has made a mistake on your tax return, you can send in an appeal by writing. You can ask for an explanation of why they have charged you what they have charged, or you can point out specific mistakes to your tax office and ask them to amend it.
It is not uncommon for HMRC to make tax return mistakes when inputting your data, so keep an eye out for any figures that seem too low or too high. It is in your own interest to rectify them as soon as possible so that you do not have to worry about overpayment relief or face unexpected tax demands later.
Will I need to pay more tax if I change my tax return?
A mistake on a tax return already filed would not necessarily lead to a higher tax bill. HMRC has a behaviour-based system of penalties for tax return mistakes, which looks something like this:
- No penalty for reasonable care exercised
- 0%-30% for careless behaviour, and a 15% minimum if an HMRC prompting is needed
- 20%-70% for a deliberate misstatement, and a 35% minimum if an HMRC prompting is needed
- 30%-100% for an intentional misstatement that was concealed, with a 70% minimum if an HMRC prompting is needed
In other words, if you have found a mistake after submitting your returns, or if you thought about deliberately trying to cover up a mistake, inform HMRC without delay – the consequences would not be pleasant when you are caught!
Over to you
Bottom line – tax return mistakes are not ideal. But they are a lot more common than you think. And as you have seen, there are ways to correct the situation and minimise or even eliminate the penalty you need to pay.
Our accountants will guide you through the best action in every situation. Reach out to know more about how we can help you ace filing your Self Assessment tax returns every year.
