Do I Need to Complete a Tax Return? .... YES !!

This question always comes up. Friends and clients a like as well as seasoned professionals somethimes are left confused as to whether they need to complete a Self Assessment Tax Return. A friend of mine recently stated "The Revenue have not requested a return  from me so therefore I do not need to complete one".  My friend is a Marketing Manager who earns £55k a year and has a small rental property in Bournemouth that yields a small profit of £1,000. I told him I would look into it and get back to him.

My first point of call is usually checking HMRC's website. So I did, and it states quite clearly a list of circumstances where one would need to complete a return , I listed the majority and ones I feel are most relevant below

1. You're self-employed
2. a company director (unless you're a director of a non-profit organisation, for example a charity, and don't receive any payments or benefits)
3. a minister of religion (any faith)
4. income from savings and investments of £10,000 or more
5. income from untaxed savings and investments of £2,500 or more
6. income from property (before deducting allowable expenses) of £10,000 or more
7. income from property (after deducting allowable expenses) of £2,500 or more
8. annual trust or settlement income on which tax is still due (even if you’re only treated as receiving this income)
9. You must complete a tax return if you have any foreign income that's liable to UK tax.
10. Your annual income is £100,000 or moreYou need to claim certain expenses or reliefs
11. You have Capital Gains Tax to pay You've lived or worked abroad or aren't domiciled in the UK
12. You're a trustee

So you would think in my friends situation he would not need to complete a return. Wrong ! The actual legislation (TMA 1970 s7) states that everyone chargeable to income tax who has not recieved a return must notify HMRC witihn six months of the tax year, The exception is if all your income has been taxed at source.

There is no doubt that HMRC website is a bit confusing. HMRC have tried to cut down on their work by reducing the number of tax returns they receive but this will not stop them issuing you with a penalty if you have failed to notify them of chargeability. I believe this will catch a lot of people out especially those that have annual income of £60,000 - £80,000 and have a small rental property. My friend was far from happy but when you think about it why should he get away with not paying tax?

It is easy to look at HMRC website and see things that you want to see but dont be too short sighted. If you do own a rental property nows the time to speak to your Tax Advisor before HMRC get you !

mitch@ljd.uk.com