MILLIONS of people have yet to file their 2012/13 tax returns.

Last year 578,000 people left it until the last possible day (January 31) to file and those who missed the deadline had a very unpleasant surprise.

A much harsher penalty regime saw people fined £100 for being one day late followed by daily penalties if their return remained unfiled at May 1.

According to HMRC’s director general Ruth Owen, some appeals against these penalties gave excuses ranging from the taxpayer’s goldfish dying to the taxpayer being too upset by seeing a volcanic eruption on the news to concentrate.

My favourite perhaps was the accountant who said he’d been too busy doing his client’s tax returns to think about his own.

The other problem with leaving it to the last minute is that it gives no time to think about ways of saving tax.

It may be too late to do anything about the tax that will fall due on January 31, 2014 (though not necessarily – there might be ways of reducing your tax bill even now), but there is still time for many people to take action to reduce the tax they will have to pay next year and in future years.

There are a number of opportunities available to many married couples and civil partners.

The most straightforward is to ensure that income is split between the couple in the most tax efficient way.

Rearrangement of investments can yield lasting tax savings.

Couples also have the chance to arrange their affairs to minimise capital gains tax and inheritance tax liabilities.

Personal allowances, Individual Savings Account allowances, capital gains tax and inheritance tax allowances are all there to be used, but I see many cases where they are underused or simply lost. Inheritance tax planning particularly needs to be done well in advance.

Businesses can often save tax by careful timing of income and expenditure close to the accounts year end.

Thought should always be given to tax before rather than after a major transaction.

And while most people think that the top rate of tax is 45% some are in fact paying tax at 62%. In many cases that could be avoided by planning ahead.

Leaving things to the last minute reduces the scope for effective tax planning.

Generally there is only one person to blame for missing out – and it isn’t the goldfish.

 

*Paul Aplin OBE is a tax partner with A C Mole & Sons and chairman of the Technical Committee of the Institute of Chartered Accountants in England & Wales Tax Faculty; you can follow him on Twitter @PaulAplinOnTax. He and fellow tax partners Amanda Gunter and Paul Kingdom can be contacted on 01823 624450.