One such option is to file the return over the internet using HMRC’s free Self Assessment Online service. HMRC are keen to promote online filing, which has a number of advantages over submission of paper returns:
sending information online is secure, convenient and quick
returns can be filed at any time – day or night, weekday or weekend
online filing is more efficient than paper returns and saves storage space, postage costs
the system will calculate how much tax is owed and whether a repayment is due
repayments are made quicker
statements for the last three years can be viewed
details of liabilities, payments and repayments can be viewed
Registering for Self Assessment Online
Before a return can be filed using Self-Assessment Online, it is necessary to register to use the service. This will take some time. In order to meet the filing deadline of 31 January, it is necessary to register by 22 January.
Registration for Self Assessment Online can be done at the `welcome to online service’ page of the HMRC website. This can be accessed by choosing the self assessment option from the `do it online’ box on the HMRC website home page (http://www.hmrc.gov.uk/) and following the link.
To register as an individual, the taxpayer needs his or her unique taxpayer reference and either his or her National Insurance number or postcode.
There are five steps to the registration process:
terms and conditions - which must be accepted to progress
about you - full name and email address
note user ID
receive activation PIN
It is important to keep a note of the user ID and password as this is required each time that the user logs on to the service.
Before the service can be used, it must be activated. The key to activate is the activation PIN, which is sent to the user through the post. The PIN should be received within seven days of registering. The activation PIN must be used to switch on the service within 28 days. After this time it expires and it is necessary to start the registration process again.
Using Self Assessment Online
Once activated, the service can be used to file a tax return over the internet. To do this, it is first necessary to log on using the User ID and password. It is important to enter these correctly because if the details are entered incorrectly three times, the system locks up for two hours, during which access is prevented. Replacement User IDs and passwords can be requested online if these are mislaid.
Self Assessment Online can be used to file the individual self assessment return (SA100), partnership self assessment return (SA800), trust return (SA900) and associated supplementary pages over the internet.
PDF attachments can also be filed online, subject to certain technical constraints. Users can use either HMRC’s free software or commercially available software. Details of commercial software packages that have been successfully tested to ensure that their return can be sent successfully over the internet are listed on the HMRC website at http://www.hmrc.gov.uk/efiling/sa_efiling/soft_dev.htm.
HMRC’s free software allows you to complete the main return form and the employment, self employment, partnership and land and property supplementary pages. Third party products must be used for other types of income, including capital gains. However, the online return cannot be used if there are multiple chargeable event gains during the year.
Using the HMRC software is straightforward. You simply select the form that you need to complete and enter the information in the boxes provided. It is not necessary to complete the return in one go – information is saved allowing the return to be completed at a later stage. This is useful if you want to input the bulk of the information but are waiting on one or two numbers.
Once all the information has been entered, the user is given the option of saving the return and printing a paper copy. There are two printing options:
HTML – this provides a black and white version of the form which is quicker to download and save, and which does not require any special software; and
PDF – this provides a colour return in exactly the same format as the paper return. However, the PDF return takes longer to download and requires a PDF viewer, such as Acrobat Reader to save and print the return. Users are given the option of downloading a free copy of Acrobat Reader when using self assessment online.
If third party software is used, the software provider will be able to provide details of how to print and save completed returns.
It is advisable to check the return carefully before submitting it as it is easier to rectify mistakes upfront. Once the user is happy with the return, it can be submitted to HMRC. An online acknowledgement that the return has successfully been received will be sent if the user stays online after sending in the return. However, during busy filing periods there may be a delay in receiving the online message. An acknowledgement will also be sent by email if the user has provided an email address to the Government Gateway.
When a tax return is filed online using either HMRC or third party software, the user’s tax liabilities are calculated automatically. This is perhaps one of the main benefits of online filing as the user will know straight away how much tax he or she needs to pay.
The 31st January 2008 is a significant date for paying tax as well as for filing returns. Any outstanding tax for 2007—08 must be paid by this date as must the first payment on account for 2008—09. Interest is charged on tax paid late.
The Self Assessment Online service also has a reminders facility to help ensure key deadlines are not missed. The reminders are in ICalendar format and a variety of reminder options are available to download from www.hmrc.gov.uk/taxisnottaxing.
There is a wealth of information on Self Assessment Online on the HMRC website. The service itself contains guidance on using the service and a number of frequently asked questions are published on the HMRC website at www.hmrc.gov.uk/efiling/sa-efiling/sa-faqs.htm.
The `tax is not taxing’ pages of the website provide further help on self assessment and filing online (www.hmrc.gov.uk/taxisnottaxing/).
HMRC have also published a video podcast which provides a short introduction to the main features of Self Assessment Online and is available at www.hmrc.gov.uk/podcasts/index.htm.
HMRC are increasingly requiring taxpayers to submit and receive information over the internet. For straightforward returns, Self Assessment Online is worth a look. The online service offers a number of advantages over the completion of paper returns, not least the facility to calculate tax liabilities automatically.
However, the clock is ticking. Those wishing to use the online service for 2007—08 returns will need to move fast. Potential users have until 22 January 2008 to register if they are to make the 31 January filing deadline.