SALF210 - Income Tax Self
Assessment Tax Returns: Other Taxpayer Obligations: Requirement to
Notify Chargeability
Taxpayers who do not receive a tax return are required to
notify chargeability to income tax or capital gains tax
Section 7(1)
| 2.87 | Self Assessment is a
system for dealing with tax returns and claims. It applies to
taxpayers who are identified as requiring a tax return and who are
issued with a notice to file or a paper self assessment tax Return
incorporating a notice to file. It also applies to people who make
a claim outside a tax return. |
| 2.88 | HMRC is not always able
to identify who needs a tax return so there is a requirement to
notify chargeability. Any person who has not been required to
complete a tax return, but who nonetheless has profits or
chargeable gains on which tax is due must notify an officer of the
Board that they are chargeable to tax. |
Time limit for notification
| 2.89 | The time limit for
notifying chargeability is six months from the end of the tax year
in which the tax liability arises. Notification must be received on
or before 5th October. |
| 2.90 | The six-month time limit
ensures that the taxpayer can be sent a tax return in sufficient
time to complete it within the normal return cycle for the year.
There is a separate requirement (and a separate £100 penalty
for failure) to notify HMRC for the purposes of National Insurance
within three months of starting a new self-employment (Regulation
87 of the Social Security (Contributions) Regulations 2001 –
SI 2001/1004) |
Exceptions to the requirement to notify chargeability
Section 7(3) to (7)
| 2.91 | There are exceptions to
this requirement. These are where the taxpayer
- has no chargeable gains (or such gains as
there are do not exceed the annual exempt amount) and
either
- has no net liability to income tax for the
year, or
- has had sufficient tax deducted at source
to meet the net income tax liability for the year.
|
Penalties for failure to notify chargeability
Section 7(8)
| 2.92 | The taxpayer is liable to
a financial penalty if notification is not made within the
six-month time limit. The maximum penalty is the net amount of tax
due, but unpaid, at 31st January following the tax year in which
the liability arises. |
| 2.93 | This means that even if
notification is made after the six-month time limit the penalty can
be eliminated if the taxpayer pays the full amount of the tax due
on or before 31st January. Where any penalties do arise they are
determined by an officer of the Board under section 100 in an
amount not exceeding the tax unpaid. |
