Tax returns are forms you complete when you calculate the amount of tax you must pay, and you submit this information to HMRC.
The forms contain details of your taxable income, as well as information on any relevant capital gains. You also claim tax reliefs and allowances using the tax return form.
Tax returns are very important in accounting, and care should be taken to ensure there are no errors. This is because HMRC uses the information you provide to calculate your tax bill, and to see if you are owed a tax return.
Company tax return and self-assessment are the two main types of tax return, and your personal circumstances will determine whether you receive a tax return to fill out.
When filling out a tax return, if you do not have certain information you need to complete it, you can enter provisional figures, but on your form you must state that you have done this.
The majority of taxpayers do not have to complete a tax return, as their wages are taxed through the PAYE system, which your employer will deal with.
If you believe you have paid more tax than you should, you should contact HMRC and ask for a tax return to be sent to you, so you can recover the money you have wrongly paid. If there has been an error then HMRC will refund the money with interest.
Your income being overstated is not unheard of, and it can result in you paying more tax than you should pay, so be sure to check carefully if you are owed money back.
Deadlines, errors and penalties
It is imperative that all tax returns are completed before the deadlines, to avoid penalties from HMRC. The tax year runs from 6 April to 5 April the following year, and you are required by law to fill in a tax return if you receive one.
The filing deadline for paper tax returns is 31 October each year. The filing deadline for online tax returns is 31 January.
If you ignore the tax return, because you don’t believe you should complete it, you will be issued with a penalty by HMRC automatically. If you do receive a tax return which you don’t believe you should have, then contact HMRC.
If a minor error has been made on your tax return, it can generally be resolved with HMRC with a phone call. However, significant errors may result in an enquiry by HMRC, and if they believe you are guilty of fraud, or negligence, then you could face a penalty.