YOUR MONEY: How to tackle a tax form

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The Independent Online
IT IS that time again. Tax returns sent out in April have to be sent back by 31 October. That leaves just over three weeks to get your tax affairs in order.

Failure to meet the deadline could mean a tax bill is delayed, and missing the tax bill's pay date can result in paying interest. The Revenue also has powers to levy fines. Despite this, countless taxpayers keep the tax return at the bottom of their in-tray for months. Its sheer length is enough to encourage procrastination. Yet the process of completing the form may not be as painful as feared. Many taxpayers will find that relatively few sections apply to them.

The best strategy is to read through the whole form carefully. This should remind you of small things that are easily overlooked - such as a covenant to charity you have undertaken (on which higher rate taxpayers can reclaim 15 per cent tax). Then read through the booklet of notes accompanying the return, jot down all the sections relevant to you, and draw up a list of the documents needed to fill in the details. This list is likely to include a P60 form, sent out by employers to people on the standard PAYE income tax system, plus details of mortgages, pension plans and savings.

Once you have collated all the information, the form should become less intimidating. But here are some additional tips.

q If in doubt, do not be afraid to ask for some hand-holding. Ring your tax inspector on the number printed on the first page of the tax return.

q If you are not sure what to put, or where to put it on the form, give the details and an explanation in a covering letter.

q The key thing is to give all the necessary information and not to be too worried by the straitjacket of the form. Use a separate sheet of paper if you know what information to provide but not where to put it.

q Certain income and capital gains are tax-free and beyond the scope of the return. Tessa and SAYE accounts, National Savings certificates and Personal Equity Plans are examples of items that can be ignored.

q Bear in mind the key dates. Much of the form concerns itself with the 1994-5 tax year, which ran from 6 April 1994 to 5 April 1995. In most cases, income received and capital gained outside those dates are not relevant.

q Ignore all the hype about self-assessment. Self- assessment will affect tax returns sent out from April 1997.

q If you are having trouble getting all the details together in time, send off the return by the deadline, stating clearly what information is outstanding, why you do not yet have it, and when you hope to be able to send it off.

q In case there is any quibble, it is wise to keep a photocopy of the return.

Contrary to a widespread belief that tax returns are sent out on a random basis, the idea is they go out only in specific circumstances. The self- employed and higher-rate taxpayers are automatically sent a return. Most employees who pay basic-rate tax are spared. However, anyone with slight complications in their tax affairs is likely to be asked to fill in a return. This could include pensioners who get income from a variety of sources, employees who get taxable benefits in kind, such as a company car, and people who pay maintenance.

If you have unexpectedly received a tax return this year the Revenue may believe there are some wrinkles that need to be ironed out. You are legally required to fill in the return.

Those who have not received a tax return should remember that the onus is on them to keep their tax office informed of things such as the odd bit of freelance work. The deadline of 31 October applies to them too.