Submit your tax forms early and you could see a return for your endeavours

Few things can nag away at your conscience quite like the knowledge that you have not yet submitted your tax return. But some imminent deadlines may make it easier to face the music.

If you are required to complete a self-assessment form (see Box) you are still months away from the last chance saloon, but getting things done and dusted in the next 10 days can save time, energy and unnecessary expense. Anyone who submits a paper self-assessment form by 30 September will be able to let the Inland Revenue do the calculations.

It will still do so if you miss this deadline, but it cannot guarantee to have done the calculations by 31 January, meaning that you risk guessing what tax to pay. If you pay too much the surplus will be refunded, but if you pay too little you will suffer interest and possibly penalties (See Box).

Anita Monteith, tax consultant for the Institute of Chartered Accountants in England and Wales, says: "This year the Inland Revenue could be much slower in processing than usual because of the much-publicised computer and personnel problems surrounding the introduction of the new Child Tax Credit. Normally I would reckon that someone getting a return in by the end of October could still find their calculations are done for them by January, but now there's an extra incentive to get in early."

Those with more complex affairs who employ an accountant or tax adviser should not be too concerned, because the adviser should perform their calculations. But, the less time they leave before the 31 January deadline, the greater the fee they are likely to be charged. Furthermore, the sooner anyone files their return the sooner they will receive repayments and the more notice they will have of the first tax payment they must make by 31 January.

Those who think their tax bill may come to under £2,000 also have a further incentive to meet the 30 September deadline, because liabilities below this limit can be collected through their PAYE tax code and spread over 12 months from April 2004.

If you have not received a tax return and have not yet informed the Inland Revenue about a new source of income not taxed at source for the past tax year, then you have until 5 October to do so. Otherwise you risk incurring a £100 fine and possibly also interest and surcharges if the tax is paid late. These penalties can equal the total unpaid tax, but in practice they are often restricted to between 5 and 10 per cent.

At least missing the 30 September deadline does not result in any financial penalties, and those who do so still have the option of getting the Inland Revenue to perform their calculations via the internet.

The final option is to attempt to do the calculations yourself, possibly receiving help from the Inland Revenue helpline (see Box). But even those who find themselves up to this task can benefit from the peace of mind of having a second opinion. For this reason, John Banbury, 43, always does his return before September and compares the Inland Revenue's calculations with his own. Normally he gets it spot on.

Mr Banbury, a marketing manager with Virgin Money, lives in Norwich, Norfolk, with his wife, Julie, and their two children, Greg, aged 17, and Georgia, 14. Having submitted his return this July, he is able to go for walks with Jess, his 6-year-old Border collie, with a clear conscience.

He says: "I'm quite an organised person generally, but it's certainly a relief to get it out of the way. If I didn't get the Revenue to calculate the tax for me I would want to check my own calculations with an accountant, but I would consider paying to do so a bit of a waste of money."

Regardless of who does the sums, you still have to provide the correct information on the remainder of the form and gathering this is undoubtedly the hardest part. Employees will need a form P60 which details pay, tax deducted and pension contributions during the past financial year, and they will also need a form P11D if they have other taxable benefits.

When it comes to completing the return, common errors include forgetting to sign it and failing to distinguish between state benefits that are taxable and those that are not. Pension contributions and investment income can also be problematic.

WHO IS ELIGIBLE AND WHAT ARE THE PENALTIES?

The Self Assessment applies to the following:

*Self-employed people, including business partners

*Company directors

*Other people with more complicated tax affairs, including people who pay higher rate tax

*Pensioners with more complex tax affairs

*People who receive rent or other income from land and property in the UK

*Trustees and personal representatives

*Trustees of approved self-administered pension schemes

*Non-resident company landlords

Potential Penalties (extra to interest from the due date):

*1 February 2004: If you were sent a tax return by 31 October 2003, you will be charged £100 if it is not received by 31 January

*31 July 2004: You will be charged a further £100

*31 January 2005: Substantial tax-geared penalties arise which can amount to 100 per cent of the unpaid tax

CONTACTS

Inland Revenue

* Helpline for completing return 0845 9000 444

* Order-line for extra pages

0845 9000 404

* Internet calculation www.inlandrevenue.gov.uk

Details of tax advisers can be obtained from:

*ICEAW 020 7920 8100; www.icaew.co.uk

* The Chartered Institute of Taxation

020 7235 9381; www.tax.org.uk