Sole Traders and Partnerships – Tax administration Flashcards
Self-assessment tax returns Payment of income tax Incorrect returns Appeals Record keeping Enquiries Notify HMRC of chargeability (30 cards)
What is the filing deadline for paper self-assessment tax returns?
31 October following the end of the tax year
For 2024/25, the deadline is 31 October 2025
HMRC will calculate the tax and notify you of the amount due by 31 January
What is the filing deadline for paper returns if the notice to file is issued after 31 July?
3 months from the date the notice to deliver is issued
What is the filing deadline for electronic self-assessment tax returns?
31 January following the end of the tax year
For 2024/25, the deadline is 31 January 2026
Tax is calculated automatically and viewable immediately
What is the filing deadline for electronic returns if the notice to file is issued after 31 October?
3 months from the date the notice to deliver is issued
What is the penalty if a tax return is filed after the deadline (paper: 31 Oct / online: 31 Jan)?
£100 automatic late filing penalty
What is the penalty if a return is filed 3–6 months late?
Daily penalty of £10
Maximum of £900
Starts from 3 months after the deadline until the return is filed
What is the penalty if a return is filed 6–12 months late?
Additional 5% of tax due or £300 (whichever is greater)
Charged on top of earlier penalties
What is the penalty if a return is filed more than 12 months late?
Depends on taxpayer behaviour:
Up to 70% of tax due (or £300) if deliberate but not concealed
Up to 100% of tax due (or £300) if deliberate and concealed
A further 5% of tax due (or £300) in all other cases
What are valid examples of reasonable excuses for late filing?
Serious illness
Destruction of records by fire or flood
Example: Return filed 10 June 2026, tax due £10,000 — What is the total late filing penalty?
£100 initial penalty
41 days of daily penalties at £10/day = £410
Total = £510
Example: Return filed 15 September 2026, tax due £10,000 — What is the total late filing penalty?
£100 initial penalty
90 days of daily penalties at £10/day = £900
6-month penalty = 5% of £10,000 = £500
Total = £1,500
When are income tax payments due under the self-assessment system?
31 January (in tax year) – First payment on account
31 July (after tax year) – Second payment on account
31 January (following year) – Final balancing payment + first payment on account for next tax year
How are payments on account calculated?
Each payment = 50% of prior year’s income tax + Class 4 NIC (after PAYE or other deductions)
Capital gains tax is not included in payments on account
When is capital gains tax paid?
In full on 31 January following the end of the tax year
Are payments on account required if prior year’s tax bill was low?
No payment on account is required if the prior year’s income tax + Class 4 NIC is under £1,000, or if more than 80% of the tax was collected at source (e.g. via PAYE)
Can payments on account be reduced?
Yes, if the current year’s tax liability is expected to be lower than the previous year
Example: Prior year income tax + Class 4 NIC = £26,000. CGT = £4,000.
What are the 2024/25 payments on account?
31 Jan 2025 = £13,000
31 Jul 2025 = £13,000
(CGT not included in these)
Total tax for 2024/25 = £31,000 including £2,000 CGT
What is the balancing payment and when is it due?
Balancing payment = £31,000 – £26,000 = £5,000
Due: 31 Jan 2026
Includes: £2,000 CGT + £3,000 additional income tax
What else is paid on 31 January 2026?
First payment on account for 2025/26 = 50% of 2024/25 income tax + Class 4 NIC
(£29,000 × 50% = £14,500)
When is interest charged on late tax payments?
Interest is charged on:
Late payments on account
Late balancing payments
From due date to day before actual payment
What is the surcharge for late balancing payments?
Within 30 days: No surcharge
30 days to 6 months late: 5% of tax outstanding
6 to 12 months late: Additional 5%
Over 12 months late: Additional 5%
When does HMRC pay repayment interest?
From date of payment to day before repayment is made
What triggers penalties for incorrect tax returns?
Understatement of tax due to:
Careless behavior
Deliberate error
Deliberate and concealed error
Penalty % depends on behavior + whether disclosure is prompted/unprompted
Penalty rates for incorrect returns:
Max 30%
Unprompted: 0%
Prompted: 15%
Deliberate (not concealed):
Max 70%
Unprompted: 20%
Prompted: 35%
Deliberate & concealed:
Max 100%
Unprompted: 30%
Prompted: 50%
