Introduction to Tax Returns and Amendments
The UK tax system can seem complex to the average taxpayer, especially when it comes to filing Self Assessment tax returns. Every year, individuals who are self-employed, earn income from multiple sources, or meet other criteria must submit a Self Assessment tax return to HM Revenue and Customs (HMRC). Mistakes in tax returns are not uncommon and can happen for a variety of reasons, such as missing information, miscalculations, or misunderstanding the tax rules. Thankfully, HMRC provides a way to correct these errors, but understanding how to amend a tax return and when it is permissible to do so is crucial.
In this first part, we will cover the basics of filing a Self Assessment tax return, common mistakes that may lead to an amendment, and the importance of correcting these errors promptly.
Filing a Self Assessment Tax Return
In the UK, not everyone needs to file a Self Assessment tax return. Typically, individuals who are employed have their taxes automatically deducted from their salary through the Pay As You Earn (PAYE) system. However, those who fall outside the scope of PAYE, such as the self-employed, individuals with additional income, or people who earn above a certain threshold from savings or investments, must file a Self Assessment tax return.
The tax return needs to be submitted online or via a paper form by the annual deadline—31st January following the end of the tax year. For example, for the 2022-2023 tax year, the deadline for filing an online return is 31st January 2024. The paper submission deadline is earlier, usually around October of the year after the end of the tax year.
Common Mistakes in Filing Tax Returns
Mistakes can happen when filing tax returns, and these mistakes often arise from errors in calculations, missing details, or incomplete information. Below are some common errors:
Incorrect Income Reporting: A frequent error occurs when individuals fail to report all their income streams. For example, they might overlook income from rental properties, overseas investments, or casual employment.
Omitted Deductions or Allowances: Taxpayers may fail to claim valid deductions, such as business expenses, or miss out on tax reliefs like pension contributions and charitable donations.
Incorrect Calculations: Sometimes, individuals who file their tax returns manually or without professional help might miscalculate their income, expenses, or the tax they owe.
Wrong Information on Tax Codes: An incorrect tax code, either assigned by HMRC or entered by the taxpayer, could lead to either underpayment or overpayment of taxes.
Errors in Personal Details: Simple mistakes in details like National Insurance numbers, addresses, or bank details could also require corrections.
These errors can affect your final tax bill, either causing you to pay too much or too little tax. Amending these mistakes promptly can ensure that you remain compliant with UK tax laws and avoid penalties.
Importance of Correcting Errors
If you discover an error in your Self Assessment tax return, it’s important to correct it as soon as possible. The implications of failing to rectify errors can be serious. For instance, if you underpay tax, HMRC will charge interest on the unpaid amount, and you could also face penalties. Conversely, if you overpay tax, failing to amend your return could mean that you miss out on a refund that you are entitled to.
Time Limits for Making Amendments
HMRC allows taxpayers to correct their Self Assessment tax return within 12 months of the original submission deadline. This is a critical time window that must not be overlooked. For example, if you filed a tax return for the 2022-2023 tax year, you have until 31st January 2025 to make any corrections. After this period, amending a return becomes more complex, as you will need to contact HMRC directly and explain the situation in writing.
Example:
Imagine Jane, a self-employed graphic designer, submitted her Self Assessment tax return for the 2021-2022 tax year on 20th January 2023. She later realized that she had forgotten to include income from a freelance project completed in early 2022. Since she is still within the 12-month amendment window, Jane can go online and amend her tax return by 31st January 2024.
Amending Your Tax Return Online
If you filed your Self Assessment tax return online, amending it is a straightforward process, provided you are within the 12-month time limit. Here's how you can do it:
Wait 72 Hours After Submission: HMRC requires you to wait at least 72 hours (three days) after the original submission before you can make any changes.
Sign in to Your HMRC Account: Using your Government Gateway ID, log into your personal tax account on the HMRC website.
Navigate to Your Self Assessment Account: From your account dashboard, select the "Self Assessment" section.
Select the Tax Return You Wish to Amend: Choose the specific tax year for the return you need to change.
Make the Required Changes: Review your original submission, correct any errors, and resubmit the amended return.
Receive an Updated Bill: Once you have resubmitted the corrected return, your new tax bill will be calculated instantly. If you owe more tax, the updated bill will reflect this, and you will need to pay the difference. If you are owed a refund, HMRC will process this within a few weeks.
If you need to make a minor correction, this method is ideal as it avoids any delays that might occur when dealing with paper forms or mailing HMRC directly.
Amending Your Tax Return on Paper
For individuals who filed a paper return, or who prefer to amend their return via paper, the process is slightly different but still manageable. Here's a step-by-step guide:
Contact HMRC: Call HMRC and request the necessary forms for making changes to your Self Assessment tax return. The main form is the SA100, but you may need supplementary pages depending on the nature of the correction.
Write “Amendment” on the Forms: Clearly label the corrected sections with “Amendment” and provide your name, Unique Taxpayer Reference (UTR), and other necessary details.
Send the Forms to HMRC: Mail the corrected forms to the appropriate HMRC address, which is usually listed on your Self Assessment paperwork. If you cannot find the address, you can send it to the Self Assessment department at the following address:
Self Assessment
HM Revenue and Customs
BX9 1AS
Wait for an Updated Bill: Once HMRC receives and processes your amended return, they will send you an updated tax bill. This process can take a few weeks, depending on HMRC's current workload.
Handling Corrections for Earlier Tax Years
If you need to make a correction for a tax return from more than 12 months ago, the process is more involved. You will need to write a letter to HMRC, providing specific details about the correction. This letter should include:
The tax year you are amending.
A clear explanation of why you believe the return was incorrect.
The amount of tax you think was overpaid or underpaid.
Your signature and contact details.
If HMRC accepts your correction, they will issue you a new bill or refund accordingly. It's important to note that you can only claim a refund (overpayment relief) up to four years after the end of the tax year in question. So, if you overpaid tax for the 2018-2019 tax year, you have until 5th April 2024 to claim that refund.
Amending a Tax Return Using Third-Party Software and Managing Complex Tax Issues
In the previous section, we covered the basics of filing a Self Assessment tax return, common mistakes that might require an amendment, and how to make corrections either online or via paper. In this part, we’ll delve into how to amend a tax return when using third-party tax software, how to manage more complex tax issues, and the consequences of missing deadlines for tax amendments. Understanding these aspects is crucial for ensuring that your tax affairs remain in order and that you avoid potential penalties.
Amending a Tax Return Using Third-Party Software
Many UK taxpayers choose to file their Self Assessment tax returns using third-party tax software, which can offer a more streamlined and user-friendly experience compared to HMRC’s own platform. This is especially common for individuals who have complex tax situations or for businesses that require professional accounting software. However, if you’ve used commercial software to file your tax return, you will need to follow specific steps to amend it through the same software.
Steps to Amend a Return with Third-Party Software
Check the Software’s Amendment Features: The first step is to check whether the software you used to file your return allows for amendments. Some software providers have built-in functionalities for making corrections, while others may require you to contact them or even HMRC for assistance.
Sign in to Your Software Account: Like HMRC’s online portal, you will need to log into your account with the software provider. Each software has its own navigation structure, but you will typically find the option to amend a tax return under the “Self Assessment” or “Tax Returns” section.
Select the Correct Tax Year: Once you’re in the right section, choose the specific tax year for which you want to make corrections. The software should allow you to edit the return you initially submitted.
Make Your Corrections: Carefully go through the tax return and make any necessary amendments. Be sure to double-check your figures, income sources, deductions, and allowances to avoid making further mistakes.
Resubmit the Amended Return: After making the necessary corrections, resubmit the tax return. Your software provider will either send the updated information directly to HMRC or give you instructions on how to do so manually.
Review Your Updated Tax Bill: Once HMRC processes the updated return, they will provide an amended tax bill. If you owe more tax, you’ll be required to pay the difference. If you’re owed a refund, HMRC will issue it to you, typically within a few weeks.
Example:
John, a freelance photographer, uses third-party tax software to file his Self Assessment tax return. After submitting his 2022-2023 return, he realizes that he forgot to include income from a side project. Since his software allows amendments, John logs into his account, selects the 2022-2023 tax year, and updates the return with the missing income. He then resubmits the amended return, and HMRC recalculates his tax bill to reflect the additional income.
When Third-Party Software Cannot Make Corrections
In some cases, you may encounter limitations with your software, such as the inability to amend certain parts of your tax return. This could happen if your software does not support certain types of income, deductions, or reliefs. If your software cannot process amendments, follow these steps:
Contact the Software Provider: Reach out to your software provider for assistance. They may have alternative methods for making amendments or might be able to guide you through a manual correction process.
Contact HMRC: If the software provider is unable to help, you’ll need to contact HMRC directly. You can either make the amendments online through HMRC’s system (if possible) or send corrected paper forms as outlined in Part 1.
It’s essential to keep copies of any correspondence with both the software provider and HMRC, as well as updated tax documents, in case you need to provide proof of your amendments later.
Managing Complex Tax Issues and Corrections
While the process for amending straightforward tax returns is relatively simple, things can get more complicated when dealing with complex tax issues. This might include cases where you have multiple income streams, overseas earnings, or have made significant financial changes during the tax year.
Correcting Overseas Income
One common complication arises when you have income from foreign sources. If you need to amend a return to include foreign income that was previously omitted or incorrectly reported, the process is slightly different. HMRC requires that overseas income is reported accurately, as the UK operates on a worldwide tax system for residents.
Here’s what to do if you need to amend a tax return to correct foreign income:
Review Double Taxation Agreements (DTAs): If you have income from a country with which the UK has a DTA, you may be able to avoid being taxed twice on the same income. Ensure that any tax you paid abroad is properly reported and that the correct relief has been applied.
Report Foreign Income Separately: Use the Foreign section of your Self Assessment form to report income earned abroad. If you’re making a correction, be sure to amend this section specifically.
Seek Professional Help: Foreign tax matters can be complicated, particularly when dealing with exchange rates, tax reliefs, and different reporting standards. In cases like this, it may be worth seeking the assistance of a tax professional to ensure the amendment is handled correctly.
Example:
Sarah, a UK resident, works part-time for a company in Germany and earns additional income in euros. When she filed her original 2022-2023 tax return, she accidentally converted her foreign income using an incorrect exchange rate, resulting in an underpayment of UK tax. After realising this error, she must amend her return, properly applying the exchange rate that was valid at the time she received the income.
Consequences of Missing the Deadline for Amendments
As we discussed in Part 1, you have 12 months from the original filing deadline to amend your tax return. If you miss this deadline, the process for making corrections becomes more difficult, and you may face additional penalties.
Amending a Return After the Deadline
If you realise you’ve made a mistake after the 12-month deadline has passed, you will need to contact HMRC in writing to request a correction. This is a more involved process, and you’ll need to provide a detailed explanation of the error, as well as the amount of tax that was either underpaid or overpaid.
Write a Letter to HMRC: Include the following information in your letter:
The tax year you’re correcting.
The reason for the correction and an explanation of the mistake.
The amount you believe is overpaid or underpaid.
A signed declaration that the information is correct and complete to the best of your knowledge.
Claim Overpayment Relief: If you’re claiming a refund, you must also make a formal claim for overpayment relief. This can only be done within four years of the end of the tax year you’re amending. The letter should clearly state that you are claiming overpayment relief, and you must include supporting evidence such as tax payment receipts.
Provide Evidence: HMRC may ask for evidence that supports your correction. This could include bank statements, foreign income receipts, or business expense invoices. Be sure to retain these documents for at least four years.
Example:
Tom, a UK taxpayer, realises in April 2024 that he underpaid tax for the 2019-2020 tax year because he forgot to report rental income. Since the 12-month deadline for amending the return has passed, Tom must write to HMRC and request a correction. He also needs to pay any additional tax due and may incur interest on the underpaid amount.
Penalties for Incorrect Tax Returns
Failing to amend a tax return when you know it contains errors can lead to penalties from HMRC. The severity of the penalties depends on the nature of the mistake, how much tax was underpaid, and whether HMRC deems the error to have been deliberate or accidental.
Careless Mistakes: If HMRC determines that the error was careless (e.g., you didn’t take reasonable care when filing your return), the penalty could be up to 30% of the tax due.
Deliberate Errors: If the error was deliberate (e.g., knowingly omitting income), penalties can range from 20% to 100% of the tax owed.
Late Payment Penalties: If your amendment results in additional tax due, failing to pay on time can lead to late payment penalties and interest charges.
Being proactive and amending your return as soon as you identify an error can help you avoid these penalties.
Dealing with Missed Deadlines and Appealing HMRC Decisions
In this section, we will explore what happens if you miss the deadline to amend your Self Assessment tax return, the process for appealing decisions made by HMRC, and how to claim overpayment relief. Understanding these processes is vital for taxpayers who may discover errors after the deadline has passed or who disagree with HMRC’s assessment of their tax situation.
Missed Deadline for Amending a Tax Return
As mentioned earlier, taxpayers have 12 months from the filing deadline to amend their Self Assessment tax return. This means that for the 2022-2023 tax year, the deadline for amending your return is 31st January 2025. However, life is unpredictable, and it’s not uncommon for individuals to discover errors after this amendment window has closed.
Fortunately, HMRC provides a way to address these late amendments, but the process becomes more formal and can involve additional scrutiny.
Writing to HMRC After the Deadline
If you realise that you’ve made an error after the 12-month amendment window has passed, the first step is to contact HMRC in writing. Unlike online or paper-based amendments within the deadline, a late correction requires a written explanation.
In your letter, you will need to include:
The tax year: Clearly specify the tax year you’re amending.
The reason for the correction: Provide a detailed explanation of why the original return was incorrect, whether due to missing income, deductions, or any other error.
The correct tax information: Supply the correct figures, including how much tax was underpaid or overpaid, as well as a breakdown of the adjustments you’re making.
Evidence: Include any supporting documents such as bank statements, receipts, or proof of payment that demonstrate why the original figures were incorrect.
A signed declaration: Confirm that the information you’re providing is correct and complete to the best of your knowledge.
You will also need to provide your Unique Taxpayer Reference (UTR) number, which is essential for HMRC to identify your account and process the amendment.
HMRC’s Response and Timeline
Once you submit your letter, HMRC will review your case. The review process can take several weeks or even months, depending on the complexity of the amendment and the current workload at HMRC. After reviewing your submission, HMRC will either:
Accept the amendment and adjust your tax bill accordingly, or
Request more information or reject the amendment if they find insufficient evidence or justification.
If your amendment results in additional tax being due, HMRC will issue an updated bill, including any interest for late payments. If you are owed a refund, HMRC will process this, typically within a few weeks after accepting the amendment.
Claiming Overpayment Relief
Overpayment relief is a crucial mechanism for individuals who realise they’ve paid too much tax, but the amendment window has already closed. Overpayment relief allows taxpayers to claim back tax they overpaid in previous tax years, but strict rules govern the process.
Conditions for Claiming Overpayment Relief
To successfully claim overpayment relief, you must meet the following conditions:
Time Limits: You can only claim overpayment relief for tax returns from the last four years. For example, if you discover you overpaid tax for the 2019-2020 tax year, you have until 5th April 2024 to claim overpayment relief. After this period, you lose the right to claim.
Reason for Overpayment: Overpayment relief applies only in cases where you believe you paid too much tax, not if you underpaid or failed to report all your income. You must be able to prove that HMRC’s original calculation of your tax liability was incorrect.
Supporting Evidence: HMRC may require you to provide supporting documents, such as receipts, proof of income, and other records, to substantiate your claim.
Exclusions: You cannot claim overpayment relief if the overpayment resulted from a mistake you made on your return, such as failing to claim a deduction or allowance at the time of filing. Instead, you would have needed to amend your return within the 12-month deadline.
How to Claim Overpayment Relief
To claim overpayment relief, you need to send a written claim to HMRC. The letter should include:
A clear statement that you are making a claim for overpayment relief.
The tax year for which you are claiming the relief.
An explanation of why you believe you overpaid tax and how much you think you overpaid.
A signed declaration that the information you are providing is “correct and complete to the best of your information and belief.”
Your UTR number, as well as your contact details.
Once HMRC receives your claim, they will review it and, if successful, issue a refund of the overpaid tax. If they reject your claim, they will provide an explanation.
Example:
Alice submitted her Self Assessment tax return for the 2018-2019 tax year and later realised that she mistakenly included income that was exempt from tax under a specific relief. Since she overpaid tax as a result of this mistake, she can claim overpayment relief. In early 2024, Alice writes a letter to HMRC explaining the situation, including proof of her eligibility for the relief, and requests a refund for the overpaid tax. She submits her claim just before the 5th April 2024 deadline to ensure it is processed in time.
Appealing HMRC’s Decision
In some cases, HMRC may reject your amendment or overpayment relief claim. If you disagree with their decision, you have the right to appeal. Here’s how the appeals process works:
Grounds for Appeal
You can appeal HMRC’s decision if:
They have rejected your amendment or overpayment relief claim.
They have issued a penalty for an error or late payment, and you believe it was unfair or unreasonable.
You disagree with the amount of tax they claim you owe.
It’s essential to ensure that you have valid grounds for your appeal and that you can provide evidence to support your case.
How to Appeal
Check the Deadline: You typically have 30 days from the date of HMRC’s decision to file an appeal. Missing this deadline could invalidate your appeal, so be sure to act promptly.
Submit a Formal Appeal: You can appeal online through your HMRC account, or you can send a written appeal by post. Your appeal should include:
A copy of the decision or tax bill you are appealing against.
A clear explanation of why you disagree with HMRC’s decision.
Any supporting evidence that could help your case.
Your contact details and UTR number.
Wait for HMRC’s Response: Once you submit your appeal, HMRC will review the case and either uphold their original decision or agree to adjust your tax bill or penalties. They may request additional information during this process.
Proceed to a Tribunal: If HMRC rejects your appeal and you still disagree with their decision, you have the option to take your case to the First-tier Tax Tribunal. This is a legal process where an independent tribunal will review your case and issue a binding decision. However, it’s worth noting that going to a tribunal can be a lengthy and costly process, so it’s best to resolve the matter directly with HMRC if possible.
Example:
Michael received a penalty from HMRC for failing to pay additional tax owed after amending his 2021-2022 tax return. He believes the penalty is unfair because HMRC did not notify him in time about the additional tax owed. Michael files a formal appeal online, including emails and correspondence that show the delay in communication from HMRC. After reviewing the appeal, HMRC decides to reduce the penalty amount, acknowledging their oversight.
What Happens If You Lose an Appeal?
If HMRC rejects your appeal and the tribunal also rules against you, you will need to comply with the original decision. This could mean paying any additional tax due, along with interest and penalties. However, if your case is particularly complex or involves large sums of money, it may be worth seeking legal advice or professional representation to ensure that your rights are fully protected during the appeals process.
Late Payment Penalties and Interest
If your amendment results in additional tax being owed, it’s crucial to pay this amount as soon as possible. HMRC charges interest on unpaid tax from the date the original tax was due (31st January following the tax year) until the tax is paid in full. Additionally, late payment penalties may be applied if the tax remains unpaid after specific deadlines.
First Penalty: 5% of the unpaid tax if it remains unpaid 30 days after the original due date.
Second Penalty: An additional 5% of the unpaid tax if it is still outstanding after 6 months.
Third Penalty: Another 5% is added if the tax remains unpaid after 12 months.
These penalties can accumulate quickly, so it’s essential to settle any outstanding tax bills as soon as you are notified of an amendment. If you are unable to pay the full amount immediately, you may be able to arrange a Time to Pay agreement with HMRC, allowing you to pay the tax in instalments.
Avoiding Mistakes on Your Tax Return and The Role of Professional Advice
As we’ve discussed in the previous sections, amending a tax return can be a time-consuming and potentially costly process, particularly if the errors are discovered after the 12-month window for amendments has passed. Therefore, taking steps to avoid mistakes on your tax return in the first place is crucial. In this section, we will explore strategies for avoiding common tax return mistakes, the role of tax software in ensuring accuracy, and when it makes sense to seek professional advice from a tax adviser.
Strategies for Avoiding Mistakes on Your Tax Return
Filing a Self Assessment tax return can be a daunting task, especially if you have multiple sources of income, complicated deductions, or unique financial circumstances. However, by being proactive and thorough, you can significantly reduce the likelihood of making errors.
1. Organise Your Financial Records Early
One of the most common reasons for mistakes on tax returns is disorganised or incomplete financial records. Taxpayers often wait until the last minute to gather their receipts, invoices, bank statements, and other financial documents, leading to rushed submissions and overlooked details.
To avoid this:
Keep a folder (digital or physical) dedicated to tax-related documents throughout the year.
Regularly update your records, including income, expenses, pension contributions, and charitable donations, so you’re not scrambling for details at the last moment.
Use accounting software or apps to track expenses, especially if you are self-employed. Many apps can categorise expenses and even integrate with your bank accounts to keep records automatically updated.
2. Understand What Income Needs to Be Reported
It’s important to report all income accurately. This may sound simple, but many taxpayers unintentionally omit sources of income because they don’t realise they need to report them. Some less obvious forms of income that must be included on your tax return include:
Rental income from properties, even if it’s from short-term rentals like Airbnb.
Overseas income if you are a UK resident, regardless of where the money is earned.
Dividends from shares or other investments.
Casual or freelance work, even if it’s sporadic or informal.
If you are uncertain whether a specific form of income needs to be declared, it’s better to err on the side of caution and seek advice from HMRC or a tax adviser.
3. Ensure You’re Claiming All Eligible Deductions and Reliefs
One of the best ways to reduce your tax liability is by claiming all eligible deductions and reliefs. However, this is also an area where mistakes frequently occur, either due to a lack of understanding of what can be claimed or by forgetting to include allowable expenses.
Common deductions and reliefs include:
Business Expenses: If you are self-employed, you can claim deductions for business-related expenses, including office supplies, travel costs, marketing, and software subscriptions. Be sure to keep detailed records of these expenses.
Pension Contributions: Contributions to personal or workplace pensions are eligible for tax relief, but you must report these contributions on your Self Assessment tax return to benefit from the relief.
Gift Aid Donations: Donations to charities through Gift Aid allow you to claim back the difference between the basic rate of tax (20%) and the higher or additional rates of tax on your donation.
Marriage Allowance: If you’re married or in a civil partnership, and one partner earns below the Personal Allowance threshold, you may be able to transfer some of their unused allowance to the higher-earning partner.
4. Use HMRC’s Online Tools and Resources
HMRC offers a variety of online tools and calculators to help taxpayers with their Self Assessment tax returns. These tools can be used to calculate allowable expenses, estimate your tax bill, and check your eligibility for certain tax reliefs. For example, HMRC’s online expenses checker is particularly useful for self-employed individuals who are unsure which business expenses can be deducted.
Additionally, HMRC provides clear guidance on how to report income from different sources, how to claim reliefs, and how to complete the various sections of the Self Assessment form.
5. Double-Check Your Return Before Submission
Before you hit the “submit” button on your tax return, it’s essential to go over every section and double-check your entries. Some areas to pay particular attention to include:
Personal Information: Ensure that your name, National Insurance number, and address are correctly entered.
Income and Expense Figures: Make sure that all figures are accurate and correctly placed in the right sections.
Tax Codes: If you’ve been issued a tax code by HMRC, ensure that you’re using the correct one. Mistakes here can result in underpayment or overpayment of taxes.
Deductions and Allowances: Double-check that you’ve claimed all the reliefs and deductions to which you’re entitled.
It can also be helpful to review your tax return with fresh eyes after taking a short break. This can make it easier to spot errors or omissions that you might have missed earlier.
Example:
Lucy, a self-employed graphic designer, is filing her Self Assessment tax return for the 2022-2023 tax year. Before submitting her return, she reviews her business expenses and realises she forgot to include the cost of new design software she purchased in early 2023. By double-checking her records, she corrects this mistake, which reduces her overall tax liability.
The Role of Tax Software in Ensuring Accuracy
Using tax software to file your Self Assessment tax return can significantly reduce the likelihood of mistakes, particularly for individuals with more complex financial situations. Here’s how tax software can help:
Automated Calculations
One of the primary benefits of using tax software is that it automatically calculates your income, expenses, and tax liability based on the information you enter. This eliminates the risk of manual calculation errors, which are common when using paper forms or spreadsheets.
Built-In Error Checking
Most tax software has built-in error-checking features that can flag missing information or potential mistakes before you submit your return. For example, if you forget to include a deduction or miscalculate your total income, the software will alert you, giving you a chance to correct the error before filing.
Integration with Financial Records
Many tax software programs can integrate directly with your bank accounts, credit card accounts, and accounting software, making it easier to import financial data and ensure accuracy. This is especially useful for business owners who have a large volume of transactions to report.
Tax Code Updates
Tax software is regularly updated to reflect changes in tax laws, rates, and reliefs. This means you can trust that the information you’re working with is current and compliant with the latest HMRC regulations.
Making Amendments
As discussed in Part 2, some tax software platforms allow you to make amendments to your Self Assessment tax return if you discover a mistake after filing. This can save time and reduce the risk of penalties for late corrections.
Example:
Jack is a landlord who earns rental income from multiple properties. He uses tax software that integrates with his property management platform, automatically importing rental income and expense data into his tax return. This reduces the chance of errors and makes filing his Self Assessment much quicker and easier.
When to Seek Professional Advice
While many taxpayers can successfully file their Self Assessment tax return on their own or using tax software, there are situations where seeking professional advice from a tax adviser or accountant is beneficial. This is especially true if you have a particularly complex financial situation or if you are unsure about certain aspects of your tax return.
Situations That May Require Professional Help
Multiple Income Sources: If you have income from various sources (e.g., employment, self-employment, rental properties, investments), it can be challenging to report everything accurately and claim the correct reliefs. A tax adviser can ensure that all income is properly accounted for.
Overseas Income: If you have earnings from abroad, understanding how the UK’s tax laws interact with international tax treaties can be complicated. A professional can help you avoid paying tax twice on the same income.
Capital Gains: If you’ve sold assets such as property, shares, or investments, you may need to pay Capital Gains Tax. Calculating the gain and any eligible reliefs can be complex, and a tax adviser can help you navigate this process.
Business Owners: For self-employed individuals or business owners, a tax adviser can help with everything from calculating allowable expenses to ensuring compliance with VAT, PAYE, and other tax obligations.
Disputes with HMRC: If you’ve received a penalty or a notice from HMRC regarding a discrepancy in your tax return, a professional can represent you in communications with HMRC and help resolve the issue.
Example:
Sophie, a UK-based consultant, receives income from clients in both the UK and the US. She’s unsure how to report her US income on her UK tax return, particularly regarding the Double Taxation Agreement between the two countries. By consulting a tax adviser with experience in international tax, Sophie ensures that she pays the correct amount of tax in both countries without being taxed twice on the same income.
The Benefits of Seeking Professional Help
Expert Knowledge: Tax advisers are well-versed in the complexities of the UK tax system and can help you navigate areas that might be confusing or time-consuming to understand on your own.
Time Savings: By handing off your tax return to a professional, you save valuable time that can be better spent on your business or personal life.
Reduced Risk of Errors: Professionals are trained to spot potential errors and ensure that your return is accurate and compliant with HMRC’s rules. This reduces the likelihood of needing to amend your return later or facing penalties.
Optimised Tax Position: A tax adviser can help you identify reliefs, allowances, and deductions that you may not have been aware of, potentially reducing your overall tax bill.
How Can a Personal Tax Accountant Help You with Amending a Tax Return?
In the previous sections, we have covered the essentials of filing and amending a Self Assessment tax return, common mistakes, the role of tax software, and how to avoid errors. However, there are situations where the complexities of tax returns, particularly when dealing with amendments or missed deadlines, may require professional assistance. In this final section, we’ll explore how a personal tax accountant can help you amend your tax return and manage the intricacies of the UK tax system.
The Role of a Personal Tax Accountant
A personal tax accountant is a professional who specializes in providing tax advice and services to individuals, sole traders, and small business owners. Their expertise includes tax planning, filing tax returns, managing disputes with HMRC, and helping clients comply with their tax obligations in the most efficient way possible.
When it comes to amending a tax return, a personal tax accountant can be an invaluable resource. Here’s how they can assist you at various stages of the amendment process:
1. Identifying Errors on Your Tax Return
While many people attempt to file their Self Assessment tax returns on their own or through tax software, there are instances where an individual might not even be aware that a mistake has been made. A personal tax accountant can conduct a thorough review of your tax return and identify errors that might have gone unnoticed.
Common Areas Where Accountants Spot Errors:
Overlooked Income: If you have multiple income streams, particularly from investments, overseas earnings, or rental properties, it’s easy to miss reporting some of this income. An accountant can help ensure that every income source is accounted for.
Missed Deductions and Reliefs: Accountants are experts in identifying all eligible deductions and reliefs. They can help you claim business expenses, charitable donations, pension contributions, and other allowances that you may not have known were applicable.
Capital Gains and Losses: If you’ve sold assets, such as stocks or real estate, calculating Capital Gains Tax can be complicated. A tax accountant will ensure that gains and losses are correctly calculated, and any reliefs such as Private Residence Relief or Entrepreneurs' Relief are applied correctly.
Example:
Emma is a self-employed photographer who also rents out a property. While filing her Self Assessment tax return, she neglected to include the rental income from her property for part of the tax year. She hired a tax accountant who reviewed her financial records and identified the missing income. The accountant helped her amend the tax return and ensured all relevant expenses related to the rental property were claimed, reducing her overall tax liability.
2. Managing Complex Tax Situations
In addition to identifying errors, tax accountants are especially helpful when dealing with more complex tax situations. Whether you have income from abroad, investment portfolios, or are involved in business activities that trigger additional tax obligations, a tax accountant can help you navigate the complexities.
Handling Foreign Income and Double Taxation
One of the most challenging aspects of tax returns is reporting foreign income and ensuring that you don’t end up paying tax on the same income twice. A tax accountant can help you:
Determine whether your foreign income is taxable in the UK.
Apply the correct tax reliefs under double taxation agreements between the UK and other countries.
Ensure the correct exchange rates are used for converting foreign currency into pounds sterling.
For those with substantial overseas income, using an accountant is a sensible choice as they are familiar with the intricate rules surrounding the UK’s worldwide tax system.
Example:
David is a UK resident who has a small business in Spain. He earns income from both the UK and Spain but is unsure how to report his Spanish income on his UK Self Assessment tax return. A personal tax accountant reviews his income and applies the Double Taxation Agreement between the UK and Spain to ensure that David doesn’t pay tax twice on the same income. The accountant helps him claim foreign tax relief, thereby reducing his UK tax bill.
3. Correcting Tax Returns After the Deadline
If you miss the 12-month window for amending your Self Assessment tax return, the process of making corrections becomes more complicated. A tax accountant can help by managing communications with HMRC and ensuring that all necessary steps are taken to amend the return successfully.
Writing to HMRC on Your Behalf
When you need to amend a tax return after the deadline, HMRC requires you to submit a formal letter outlining the corrections. A tax accountant can draft this letter for you, ensuring that all necessary details are included, such as:
The specific tax year in question.
An explanation of the error and why the correction is needed.
Supporting documents to substantiate the changes (such as bank statements, invoices, or foreign income receipts).
A signed declaration confirming the accuracy of the amendment.
The accountant will also keep track of any communications with HMRC, follow up on your case, and ensure that your amendment is processed as efficiently as possible.
Example:
Tom submitted his Self Assessment tax return late for the 2019-2020 tax year and later realized he forgot to include significant freelance income. The deadline to amend the return had passed, so he consulted a tax accountant. The accountant drafted a formal letter to HMRC explaining the error, included supporting documents, and successfully helped Tom amend his tax return, avoiding additional penalties and interest.
4. Claiming Overpayment Relief
As discussed earlier, overpayment relief allows you to claim back tax that you overpaid in previous tax years. However, the process can be complex and requires careful attention to detail. A tax accountant can guide you through this process, helping you determine whether you’re eligible to claim overpayment relief and ensuring that your claim is submitted correctly.
How an Accountant Can Help with Overpayment Relief:
Assessing Eligibility: The accountant will review your financial records and tax returns to determine if you’ve overpaid tax and whether you’re within the four-year window to claim relief.
Preparing the Claim: The accountant will prepare the claim, including a detailed explanation of why you believe you’ve overpaid tax, how much you think you’re owed, and all necessary supporting documents.
Managing Communications with HMRC: Once the claim is submitted, the accountant will handle any follow-up communications with HMRC, ensuring that the claim is processed efficiently.
Example:
Sarah, a UK resident, sold a second property in 2019 but overpaid Capital Gains Tax because she didn’t claim Private Residence Relief on part of the gain. In 2024, she consulted a tax accountant, who reviewed her records and helped her submit an overpayment relief claim to HMRC, successfully obtaining a refund for the overpaid tax.
5. Appealing HMRC Decisions
If you disagree with an HMRC decision regarding your tax return amendment or an overpayment relief claim, a tax accountant can represent you in the appeals process. Accountants have experience dealing with HMRC and understand how to navigate the appeals system.
Appealing Penalties and Assessments
Accountants can help you appeal penalties related to late payments, errors, or underreported income. They will:
Review the grounds for HMRC’s decision.
Gather evidence and prepare a robust appeal case.
Submit the appeal within the deadline and represent you in discussions with HMRC.
If necessary, the accountant can escalate the case to a tax tribunal, where they will continue to provide representation.
Example:
Martin received a penalty from HMRC for allegedly underreporting his income on his Self Assessment tax return. However, Martin believes that he reported his income accurately. He hired a tax accountant, who reviewed his financial records, gathered evidence, and filed an appeal on his behalf. The appeal was successful, and HMRC withdrew the penalty.
6. Tax Planning for Future Years
Beyond helping you amend your tax return, a personal tax accountant can also assist with proactive tax planning for future years. By optimising your tax position, an accountant can help you avoid making similar mistakes in the future and ensure that you take full advantage of available deductions, reliefs, and allowances.
Ongoing Support:
Pre-filing Consultation: A tax accountant can review your financial situation before you file your tax return, ensuring that you don’t overlook income, expenses, or deductions.
Tax Efficiency Strategies: Accountants can provide advice on how to structure your income and investments to reduce your tax liability, particularly for self-employed individuals, landlords, and those with foreign income.
Compliance: Accountants keep up to date with changes in tax laws and ensure that your tax affairs are always compliant with HMRC’s latest requirements.
Amending a tax return in the UK can be a straightforward process if handled promptly and with attention to detail. However, if the tax return involves complex income sources, deductions, or is being amended after the deadline, enlisting the help of a personal tax accountant can make all the difference. Accountants provide expert guidance on identifying errors, navigating foreign income rules, claiming overpayment relief, and representing you in disputes with HMRC.
By using a tax accountant, you not only ensure that your amendments are handled correctly but also benefit from proactive tax planning, reducing your risk of errors in future filings. Whether you’re self-employed, managing multiple income streams, or simply seeking peace of mind in your tax affairs, the expertise of a professional can save you time, money, and stress when dealing with HMRC.
FAQs
Q: Can you amend a UK tax return if you are self-employed and missed claiming certain expenses?
A: Yes, you can amend your Self Assessment tax return to include missed business expenses within 12 months of the original filing deadline.
Q: How do you amend a tax return if your accountant made a mistake?
A: You can either amend the return yourself through HMRC's online portal or your accountant can submit the amendment on your behalf.
Q: Can you amend a tax return after receiving a refund?
A: Yes, you can still amend your tax return even after receiving a refund. The amendment may result in a change to your tax liability, and you may need to return part of the refund or pay additional tax.
Q: What happens if you underpay tax after amending your return?
A: If your amended return shows you owe more tax, HMRC will issue a new bill, and you may also be charged interest on the underpaid amount from the original payment deadline.
Q: Can you use a repayment to offset future tax liabilities after amending your return?
A: Yes, if you are owed a refund after amending your tax return, you can request that HMRC offsets the refund against future tax liabilities.
Q: Can you amend a tax return if you’re not registered for Self Assessment?
A: No, only taxpayers who are registered for Self Assessment can file and amend tax returns. If you believe you should have been registered, you must register before submitting any returns.
Q: Are there any fees for amending a tax return through HMRC?
A: No, HMRC does not charge any fees for amending a tax return, whether done online or via paper.
Q: What is the penalty if you amend a tax return and it results in additional tax due?
A: If the additional tax is paid late, HMRC may impose penalties ranging from 5% to 15%, depending on how long after the deadline the payment is made.
Q: Can you amend a partnership tax return?
A: Yes, a partnership tax return can be amended within the same 12-month period following the original filing deadline.
Q: Do you have to notify HMRC if you amend a tax return online?
A: No, you don’t need to notify HMRC separately; the online system will automatically submit the changes for review.
Q: Can you amend your tax return if you received a penalty for late filing?
A: Yes, you can amend a tax return even if you’ve received a penalty for late filing, but the penalty may still stand unless successfully appealed.
Q: Can you claim a new relief not included in the original return during an amendment?
A: Yes, you can claim reliefs or deductions that you didn’t originally include as long as the amendment is made within the 12-month window.
Q: Can HMRC audit an amended return more closely than the original return?
A: Yes, HMRC can decide to investigate any return, including an amended return, if they suspect inaccuracies or fraudulent activity.
Q: Is there a limit to how many times you can amend a tax return?
A: No, there is no limit to the number of times you can amend a return, as long as each amendment is made within the 12-month window.
Q: What happens if HMRC disagrees with the changes you made to your amended return?
A: HMRC may issue a query or open an investigation if they disagree with the amendments. You may need to provide additional documentation to support your changes.
Q: Can you amend a tax return to claim a loss from a previous year?
A: Yes, you can amend a return to claim a loss carryback or other reliefs related to losses from previous years, but you must do so within the allowable time limits.
Q: Can you amend your return if you forgot to report foreign bank interest?
A: Yes, you can amend your tax return to include any foreign income or interest that you forgot to report.
Q: Can you amend a tax return if you accidentally declared income that was tax-free?
A: Yes, you can amend your tax return to correct any mistakenly declared tax-free income, such as certain pension contributions or tax-exempt savings accounts.
Q: Can you amend your tax return if your circumstances change, like receiving inheritance money?
A: If inheritance was received after the tax year ended, it does not affect the return for the previous year, but you should report it in the next tax return. If you made an error related to inheritance in the previous return, you can amend it within the allowed time frame.
Q: Can you amend a UK tax return if you're no longer living in the UK?
A: Yes, even if you’ve moved abroad, you can still amend your UK tax return as long as you are within the amendment window.
Q: Can you change how you paid your tax bill after amending a return?
A: While you cannot change the method of payment for tax already paid, you can adjust future payments if you owe additional tax after the amendment.
Q: Can you amend a tax return after closing a business?
A: Yes, you can amend a tax return after closing a business, as long as the return in question pertains to a period when the business was active.
Q: Can you claim back overpaid tax on a student loan after amending a tax return?
A: Yes, if amending your tax return shows that you’ve overpaid your student loan, you can request a refund from HMRC or the Student Loans Company.
Q: Can you appeal if HMRC rejects your tax return amendment?
A: Yes, if HMRC rejects your amendment, you have the right to appeal the decision within 30 days of receiving their response.
Q: Can you amend your return if you made a mistake with your dividend income?
A: Yes, you can amend your tax return to correct any mistakes made in reporting dividend income.
Q: Can you amend a tax return if the amendment increases your tax liability?
A: Yes, but you will need to pay any additional tax owed and possibly face interest charges on the late payment.
Q: Can you request a Time to Pay arrangement after amending a tax return?
A: Yes, if the amendment results in additional tax due and you cannot pay it immediately, you can apply for a Time to Pay arrangement with HMRC.
Q: Can you amend a tax return if you’ve been made redundant and received a severance package?
A: Yes, if you received a redundancy payment and failed to report it correctly, you can amend your tax return to ensure it is taxed properly.
Q: Can you amend a tax return to report additional property income?
A: Yes, if you forgot to report rental income or other property-related earnings, you can amend your return to include it.
Q: Can you amend a tax return if you’ve been made bankrupt?
A: Yes, even in bankruptcy, you may need to amend previous tax returns to reflect the correct financial information.
Q: Can you claim Gift Aid relief after submitting your original return?
A: Yes, you can claim Gift Aid relief during an amendment if you failed to claim it in the original submission.
Q: Can you amend a return to correct an overpayment of National Insurance contributions?
A: Yes, you can amend a return if it leads to a correction in your National Insurance contributions, and HMRC will refund any overpaid amounts.
Q: Can you file an amendment to a tax return if your original return was filed late?
A: Yes, you can still amend a late-filed tax return, but penalties for the original late filing may still apply.
Q: Can you correct mistakes in pension contributions after amending a return?
A: Yes, you can amend a return to correct any errors related to pension contributions, whether it’s overpayment or underpayment.
Q: Can you amend a tax return to change the split of income between spouses or civil partners?
A: Yes, but you will need to ensure the amendment is in line with tax laws on income sharing between spouses or civil partners.
Q: Can you amend a tax return if you missed claiming working from home expenses?
A: Yes, you can amend your tax return to claim working from home expenses if you were eligible and missed claiming them in your original submission.
Q: Can you amend a tax return to claim capital allowances on business equipment?
A: Yes, if you missed claiming capital allowances on business equipment in your original return, you can amend the return to include them.
Q: Can you amend a tax return if you’ve switched from sole trader to a limited company?
A: Yes, you can amend previous tax returns for when you were a sole trader, but once you switch to a limited company, your tax obligations will change.
Q: Can you amend a tax return if HMRC has already started an investigation?
A: Yes, you can still amend your tax return even if HMRC has begun an investigation, but any changes may be scrutinised closely.
Q: Can you amend a tax return to correct mistakes in VAT reporting?
A: No, VAT returns are separate from Self Assessment tax returns. You must submit a separate correction for VAT errors through the appropriate VAT process.
Disclaimer:
The information provided in our articles is for general informational purposes only and is not intended as professional advice. While we strive to keep the information up-to-date and correct, My Tax Accountant makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained in the articles for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
We encourage all readers to consult with a qualified professional before making any decisions based on the information provided. The tax and accounting rules in the UK are subject to change and can vary depending on individual circumstances. Therefore, My Tax Accountant cannot be held liable for any errors, omissions, or inaccuracies published. The firm is not responsible for any losses, injuries, or damages arising from the display or use of this information.
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