Anyone planning on sending in their tax return on paper this year should be aware that the time allowed to do so has been cut by three months, says Maidstone based DSH chartered accountants and business advisors. Forms covering the 2007/08 financial year (ended 5 April) must now be returned to Her Majesty’s Revenue and Customs by 31 October to avoid incurring a £100 penalty.

The deadline for filing an electronic version remains at 31 January 2009 – however, DSH strongly recommends ALL tax returns be prepared for filing by 31 October.

Steve Carpenter, Tax Manager at DSH, said: “Even if you have previously filed your return electronically, there is no guarantee you can do so again this year. This is for a number of reasons, most notably that certain sources of income cannot be filed online, so having everything ready before the end of October should be everyone’s priority.”

HMRC has indicated penalties will be charged for late filing – even in those cases where the return cannot be filed online because of a particular item on it. And although it can be tempting to leave tax returns until after the summer, there are some compelling reasons why they should be tackled sooner rather than later.

Steve Carpenter said: “The task of sorting through the relevant pieces of paper is much easier if you are just a few weeks into the next tax year – by September far more will have accumulated making isolating what’s needed for 2007/08 that much harder.

“Also by working out what you owe early, you can ensure you have the funds available to cover the tax. Similarly, if you are due a repayment it can be recovered as quickly as possible. Meeting the October deadline means you minimise the risk of a late payment penalty, and you can stop worrying about tax forms.”

As well as the changes to the filing deadline, HMRC has introduced a new penalty system relating to enquiries into tax returns. Where a mistake or omission is made when completing the return, and additional tax becomes payable, penalties are geared to a percentage of the tax due. Keeping good records is therefore essential.

HMRC has been running a series of roadshows around the country to encourage Agents to make full use of the online services it offers, including the submission of tax returns, as this reduces its costs. Steve Carpenter was invited to speak at one about DSH’s experience.

He said: “Generally the online services enable us to provide a better service to clients as returns are processed instantaneously and, if a client is due a refund of tax and gives permission for it to be credited directly to their account, we regularly find the refund is received within a week of the return being approved by the client.”