Submit your monthly tax returns
If you don’t file your tax return each month, HM Revenue & Customs (HMRC) will fine you up to £3,000 per month. If you’re late filing, HMRC will charge interest on the amount owed. You’ll also be charged penalties and fines.
There’s no excuse for missing out on filing your tax return. But if you do miss it, make sure you know what happens next. Here’s everything you need to know about filing your monthly returns.
1. What do I need to file my monthly return?
You must complete Form 1040/1040A and attach the relevant supporting documents. These include:
* A statement showing how much income you had during the previous 12 months
* Details of your expenses
* Any deductions you claim
If you made no payments
Inactivity requests last for six months
You don’t have to pay VAT if you haven’t been paying it
You need to tell HM Revenue & Customs if you stop using subcontracting firms or start using them again – even if you’ve already paid them
Using commercial CIS software
HM Revenue & Customs (HMRC) are looking into whether businesses are using commercial information systems (CIS) to avoid paying tax. They say they’ve noticed a rise in the number of firms claiming to use such software – but they don’t think it’s legitimate. “We are aware of some companies using CIS software to claim expenses,” says Simon Gittins, head of compliance at HMRC. “This is something we take very seriously.”
The government agency says it wants to ensure that taxpayers aren’t abusing the system. But it’s not clear what exactly constitutes abuse. “If someone uses a piece of software to generate invoices or receipts, and the software doesn’t match up with our records, we could ask for further evidence to show how the software was used,” explains Mr Gittins.
He adds that HMRC isn’t able to check every single invoice or receipt. Instead, it relies on reports submitted by businesses about how they use CIS software. If there’s a discrepancy, HMRC asks the firm to provide additional documentation.
Mr Gittins says that he hasn’t seen any cases where HMRC has received complaints about the use of commercial CIS software. However, he does warn that if people do try to evade taxes, HMRC will investigate thoroughly. “We’ll look at everything – bank statements, credit card bills, invoices, anything like that,” he says.
Penalties for late returns
If you’re late paying tax, you could face penalties of up to £1,000 per person. But there are some ways around it. Here are three things you should know about penalties for late payments.
1. Penalties are based on what you owe HM Revenue & Customs (HMRC). If you don’t file your tax return, you won’t owe anything. So if you don’t pay any tax due, you won’t be penalised. However, if you do owe money, you could still be hit with a penalty.
2. There is no limit on how much you can be fined. This means that even if you owe just one penny, you could be slapped with a fine of £1,000.
3. A penalty doesn’t mean you’ve been charged with a crime. In fact, HMRC says that “penalties are not criminal sanctions”. They’re simply a way of getting people to pay up.
If you disagree with a penalty
HM Revenue & Customs (HMRC) has launched a new online appeals system for penalties imposed under the Universal Credit rules. The new system replaces the previous paper-based system and allows people to submit an appeal online via HMRC’s online service.
The new system makes it easier for people to make an appeal against a penalty because it removes the requirement to write out a full explanation. Instead, people are required to quote the reference number given in the penalty notice and provide a reason why they believe the penalty is unfair.
People who fail to meet the deadline cannot appeal the penalty. However, there is a grace period where people can still appeal even if they do not comply with the deadline. This applies to penalties imposed under the Universal credit rules.
Appeals must be submitted through HM Revenue & Customs’ online service. Appeals should be sent to the address below quoting the reference number shown in the penalty notice and the payment reference shown on the original penalty notice.
Please note that the appeal form does not apply to fines or penalties imposed under the Income Support rules. These can only be appealed through the existing paper-based process.
Frequently Asked Questions
What obligations do contractors have under the CIS?
Contractors are responsible for ensuring they use subcontractors who are registered with HMRC. They must also ensure that the subcontractors they use are compliant with tax rules. This includes completing a CIS return each month and making CIS payments to HMRC, and it’s also the contractor’s responsibility to check that the subcontractors they hire are doing the same thing.
HMRC says there are around 3 million businesses operating within the UK, employing over 10 million people. So, you could imagine how many different companies are involved in building projects, from architects and engineers to plumbers and electricians. In fact, some estimates suggest that there are around 2 million unregistered workers across the UK. As such, it’s important that contractors verify the identity of those working for them.
What do I need to verify a subcontractor with HMRC?
HM Revenue & Customs (HMRC) requires you to provide information about each contractor you use to carry out work for you. This includes providing the name, address, contact phone numbers, email addresses and unique taxpayer reference number (UTR) of the person carrying out the work.
The information needed depends on whether the contractor is a limited company, a partnership or a sole trader. There are three ways you can obtain this information:
1. You must complete it and submit it within six months of the end of the tax period.
2. Call HMRC’s Contact Centre on 0300 123 5000. Ask for the HMRC Customer Services Team. Tell them you want to check the status of a tax return. They’ll ask you for the contractor’s unique taxpayer reference number (which you can find on most invoices) and give you a call back.
3. Email the following documents to [email protected]:
• A copy of the invoice showing the contractor’s UTN and employer reference number
• An explanation of why you need to know the contractor’s UTN