‘The deadline for submitting your Self Assessment Tax Return is imminent’ – if you go into a state of panic every time you read or hear words like this, then calm down, make yourself a coffee and read on – things might not be as bad as you think.
You probably have a very good reason for having not yet submitted your tax return. If it’s because you’re reluctant to submit a return that is incomplete because of missing information, then you may still have time to sort things out and avoid the £100 penalty you’ll receive if you miss the 31st January deadline.
Of course it is important that you are as accurate as possible when it comes to your return, however if you can’t find a document containing the details of income or expenditure or you have no records of specific transactions at all, then HMRC’s ‘process now and check later’ approach could help you out here.
HMRC work on the basis of calculating what you owe by processing the numbers you submit now, whether they’re 100% accurate or a finger in the air estimate. They then check the figures for accuracy later (if necessary), so if you need to you can declare an ‘estimated’ or ‘provisional’ figure.
Now, ‘estimated’ and ‘provisional’ figures are viewed slightly differently by HMRC, so let me explain when to use them.
Estimated – I didn’t get an invoice and can’t get one
Use an estimated figure when you know that you’ll probably never know the exact figure e.g. you paid cash for an ad hoc odd job such as window cleaning in your new premises; or you can’t get your hands on a duplicate receipt or invoice e.g. a supplier has gone out of business.
HMRC asks that you tick a box on your return when you’ve used an estimated figure, we would suggest that you only tick this box if you think that you may be able to update the figure with an accurate one later on, and if this is the case it would be treated as a provisional figure rather than an estimated one.
Provisional – I’ve misplaced the invoice and won’t get a duplicate on time
Use a provisional figure when you expect to be able to update it or will have the paperwork at a later date e.g. you’ve lost an invoice and can’t get in touch with the supplier to find out the exact figure or get a duplicate, but you know that you eventually will.
You should tick the provisional or estimated figure box and keep a record of how you arrived at the provisional figure. This might just be a guess, but that’s fine as long as you have sound reasoning for arriving at that figure.
As soon as you know whether your provisional figure was correct or not you must notify HMRC. If you don’t, they won’t know whether to accept your figure as final and it may result in them conducting an enquiry into your tax return.
So what are you waiting for?
The bottom line is that you can include estimated or provisional figures in order to get your tax return in by 31st January. So, even if you don’t have all the information you need use your best judgement to calculate the missing information, but keep a record of how you arrived at your figures and tell HMRC if you expect to amend them. This will help reduce the risk of HMRC querying your return at a later date.
To discuss this post contact Stephen Usher on 0141 418 6550 or email@example.com