Child benefit returns deadline looms

Tax payers who have received child benefit in last tax year and are earning more than £50,000 are being reminded that they must submit a tax return by 31 January.

Many financial advisers have expressed concern that those who are expected to submit a return are unaware, or do not appreciate the consequences of failing to do so.

There is an automatic £100 fine for missing the 31 January deadline and any tax paid after the deadline will also incur interest. Any outstanding tax after 2 March will attract a 5 per cent surcharge.

James Hender, partner and head of the private wealth group at Saffery Champness, comments: "More people than ever are having to file tax returns owing to the claw back of child benefit. This is the first year in which the government reclaims 100% of child benefit from households in which someone earns more than £60,000. Under the rules, if your income is above £50,000 and you have received child benefit in the last tax year, you must submit a return.

"Of late HMRC have been sending speculative letters to higher earners, asking them to formally declare by 31 January that they or their partners are not due to repay any child benefit received. This indicates that they are focused on this issue, and are sure to follow up with anyone they suspect of not complying."

Practical considerations

Lucy Brennan, also a partner in Saffery Champness' private client team, warned tax payers that registration for the platform used to submit tax returns can take more a week, and so must be factored into their planning.

HMRC has made clear that postal delays will not be considered a valid excuse for late returns.

"Time is really short now if you have lost your login details for the government gateway or are filing for the first time and need to request an activation code in order to use the government gateway. These are sent out in the post and can take up to seven days to arrive, if not longer. HMRC will not accept delays in the post as an excuse for late filing of a return and will uphold penalties for late returns in these circumstances," she said.

James Hender added: "HMRC computer servers have a nasty habit of crashing under the weight of last-minute filers, so early submission is advisable. I have seen an increase in the number of incorrect PAYE codes for 2013-14. This has already resulted in clients having unexpected tax liabilities at 31 January, and is something to look out for."

Binyamin Ali is assistant editor of Private Client Adviser