Better Never Late WITH the January 31 deadline for filing tax returns looming, over a million people have yet to file.

Last year around a third of a million people filed on the last day but many missed the deadline and faced penalties for their failure.

Some appealed against their fines, giving excuses as varied as “my pet dog ate my tax return” and “I’ve been travelling the world trying to escape a foreign intelligence agency”.

My favourite was “I’ve been busy looking after a flock of escaped parrots and some fox cubs”.

Fines for late tax returns start at £100 for being one day late and increase dramatically after three months, with a penalty of £10 for each additional day the return is outstanding.

The best advice is obviously to get the return – and at this stage it has to be an electronic return – in on time. But leaving it this late often also means paying too much tax.

Every year I see people leaving it to the last minute (which of course they are perfectly entitled to do). But they are almost always the same people who never make time to plan ahead. And while some cannot save any tax, many could if they took advice.

I’m not talking about complex ‘schemes’ here but about basic things like making sure you have used all of the allowances you are entitled to.

Married couples and civil partners have a number of opportunities to reduce their overall tax bills and the same is true of anyone in business.

There are tax efficient investments which can either generate tax refunds or shelter income and capital gains from tax.

There are opportunities to reduce tax through pension schemes and charitable giving. There are opportunities to avoid the worst tax rates (including the 60% income tax rate - and yes, you did read that correctly).

But these savings are only available if you plan ahead. The opportunities to reduce last year’s tax bill are now very limited (although some do exist).

Why not make a New Year resolution to save some tax by talking to your adviser? The alternative may be to seek an excuse for late filing, but you’ll need to do better than the person who claimed that Barak Obama was in charge of their finances. HMRC didn’t believe them – and I’ll bet that they paid more tax than they really needed to.

*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.