Last Minute Tax Filing Advice For Expats

Lisa Smith, BA (Hons), CeFA

The dreaded deadline for filing self-assessment returns isonly days away with tens of thousands of taxpayers expected to leave the job until the last minute.

HM Revenue & Customs expects nearly 11 million tax returns by midnight on January 31, 2019, with more than 90% going through the online gateway for electronic filing.

Last year, 758,707 people rushed to file their returns on deadline day.

The busiest time was between 4 pmand 5 pmwhen 60,596 returns were filed at the rate of 1,010 a minute – which works out as 17 every second.

Another 30,348 taxpayers narrowly avoided a penalty playing brinkmanship by filing their self-assessment returns after 11 pmon deadline day with less than an hour to go.

If you have yet to start work on your tax return, here’s some last-gasp advice that could help save the £100 late-filing fixed penalty.

Who needs to file a tax return?

If you live or work overseas, you may have to pay tax in the UK on some or all your income.

The deciding factors are the source of the income and your expat residence status for tax.

This can be tricky to decide and probably involves advice from tax advisers in the UK and the place where you live.

Almost certainly, the statutory residence test will indicate if you should pay UK tax.

Typically, the three main reasons expats must pay UK tax are:

  • Receiving income from acting as a director of a UK company
  • Collecting rent from UK property
  • Picking up pay from working in the UK

You should declare any income received between April 6, 2017,until April 5, 2018.

Forget a paper tax return

If you hope to file a hard copy self-assessment tax return, forget it.

The deadline for paper filing passed on October 31, 2018, so you must file online.

Don’t ignore HMRC

HMRC has a long reach, especially if you are a UK expat in the European Union. Do not ignore letters or demands to file a tax return even if you believe you do not owe any tax.

If you are asked to complete a tax return, you must do so.

You will need a Unique Taxpayer Reference (UTR) and to register with the self-assessment online gateway.

Expats should have applied for a UTR for this month’s tax filing by October 5, 2018.

  • If you do not have a UTR, apply right away but be aware HMRC can take 21 days to process the application and get the UTR out to you, so you may already have an automatic fine.
  • If you have lost your UTR, you can find the 10-digit number on letters from HMRC, including any notice to file a return and payment reminders.

Late filing penalties

Self-assessment late filing penalties are automatic and apply if you owe tax or not.

They are:

  • Missing the midnight on January 31 deadline – £100
  • May 1 – £10 a day up to £900 (90 days) for every additional late day
  • August 1 – £300 or 5% of the tax owed, whichever is greater
  • February 1 (One year late) – £300 or 5% of the tax owed, whichever is greater

Separate penalties are also due for missing tax payment deadlines

Excuses for filing late

Some excuses just won’t wash.

HMRC revealed last year’s worst explanations for self-assessment late-filing.

Top of the list was a man whose wife says she sees aliens and won’t let him into their house.

That was followed by the taxpayer who explained his tax return was upstairs and he couldn’t get it because he suffered from vertigo.

Another spilt coffee over his return, so could not read it.

HMRC will accept a reasonable excuse and those generally accepted include:

  • A partner or close relative died shortly before the deadline
  • You had an unexpected hospital stay that stopped you from dealing with your tax affairs
  • You had a serious or life-threatening illness
  • Your computer or software failed just before or while you were preparing your online return
  • Service issues with HMRC online services
  • A fire, flood or theft prevented you from completing your tax return

How to get extra time to file your tax return

This is a trade secret that accountants use to avoid late-filing penalties.

HMRC rules allow taxpayers to amend their returns within 12 months of the January filing deadline without penalty.

If your tax return is not ready by midnight on January 31, rather than delay and pick up penalties, file the return as is and pay the amount of tax you consider is due when you have filed the correct figures.

This stops the penalty clock from running and gives you extra time to work out the correct figures.

You may have paid too much tax, so claim the amount back. HMRC will pay with interest.

If you have not paid enough tax, then pay the extra and any penalty due, which will normally just be interest.

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