Requirement to notify HMRC of income tax and capital gains tax liabilities

As the deadline for the submission of self-assessment income tax returns fast approaches, it is important to remember another important deadline – 5 October.

Taxpayers who receive a tax return to complete for the 2014/15 tax year must submit these online to HMRC by 31 January 2016 (or by 31 October 2015 for paper submissions). However, taxpayers who do not receive a tax return to complete must notify HMRC by 5 October 2015 if they had income or capital gains in the 2014/15 tax year on which further tax is due.

Taxpayers are not required to notify HMRC of chargeability where they have no gains, or the gains do not exceed the annual exempt amount (£11,000 for 2014/15) and where they:

  • have no liability to income tax for the tax year, or
  • have had sufficient tax deducted at source (e.g. PAYE deductions) to meet the net income tax liability for the tax year.

Failure to notify HMRC of chargeability by 5 October 2015 may incur a penalty where the tax due remains outstanding at 31 January 2016. The penalty can be anywhere between 10% and 200% of the potential loss of tax to HMRC depending on the severity of the failure to notify HMRC; whether the behaviour was careless, deliberate or deliberate and concealed. The level of penalty will also take into account whether the disclosure of the failure is prompted or unprompted and whether it relates to UK or offshore matters. The potential loss of tax to HMRC is the amount of tax unpaid at 31 January 2016.

If you are unsure whether you need to notify HMRC of chargeability, please contact your usual Moore Stephens tax advisor to discuss the matter.

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