If you're self-employed, you have to fill out a Self Assessment tax return every year. You should have received a reminder from HMRC back in April if you've submitted a paper tax return before.
Your self assessment tax return details the profits your business has made alongside any other income that you'll have to pay tax on - such as rental income. This is used to work out how much tax and National Insurance contributions you will have to pay.
It's worth starting on your paper self assessment return early. All information must be 100% correct - you don't want to be pulling an all-nighter and sending in your return bleary-eyed and full of mistakes at the 11th hour.
You must keep records so that you can fill in your tax return fully and accurately. The more detailed records you keep, the easier it will be to answer any questions that HMRC may come back with. Accounting software like Intuit Quickbooks allows you to keep on top of the books and makes filling out your self assessment a doddle.
If you miss the deadline for sending in your paper tax return, you can still send it online instead. The deadline for online self assessment returns is midnight on 31 January 2012. If you don't file your online return by then, you will, of course, have to pay a penalty.
If your paper tax return reaches HMRC late, even just a day after the 31 October deadline, you'll have to pay a penalty. This penalty stands at £100. You'll have to pay this fine even if you have no tax to pay or you pay all the tax you owe before 31 January 2012.
The penalty increases if you delay filing your return further. Once your tax return is three months late, you'll have to pay a penalty for each additional day it is late. If it is six months late, you'll have to pay a further penalty and another final penalty if it is 12 months late. Together these could add up to a penalty of £1,600 or more.