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Happy, Grumpy and Sneezy are three brothers. All complete self- employed tax returns for the tax year 2019/20. Sneezy is required to make a balancing payment of 1,800 in respect of his income tax liability for the year 2019/20.

For the tax year 2019/20Happy wants to file a paper self-assessment tax return and have HM Revenue and Customs (HMRC) prepare a self-assessment on his behalf. Grumpy also wants to file a paper tax return but will prepare his own self-assessment. Sneezy wants to file his tax return online.

Required

1. Advise Happy, Grumpy and Sneezy of the latest dates by which their respective self-assessment tax returns for the tax year 2019/20 will have to be submitted given their stated filing preferences.
2. Advise Happy, Grumpy and Sneezyas to how long they must retain the records used in preparing their respective tax returns for the tax year 2019/20, and the potential consequences of not retaining the records for the required period.
3. State the date by which Sneezy should make the balancing payment for the tax year 2019/20.
4. Advise Sneezy of the consequences of not making the balancing payment for the tax year 2019/20 until 31 May 2021.

Note:your answer should include calculations as appropriate.

TAX DATA

CORPORATION TAX

Augmented Profits Corporation Tax rate Corporation Tax rate

Financial Year 2018 Financial Year 2019

(1.4.2018 to 31.3.2019) (1.4.2019 to 31.3.2020)

All Profits Main Rate 19% Main Rate 19%

NATIONAL INSURANCE

Tax Year 2019/2020

Self-employed National Insurance Contributions (sole traders and partners)

Class 2 contributions are payable at a flat rate of 3.00 per week, and in addition,

Class 4 contributions are payable on the profits as follows:

9% of profits for the year between 8,632 and 50,000 plus

2% of profits above 50,000

INCOME TAX

Personal Allowancefor tax year 2019/20: 12,500

Tax bands 2019/20

Basic rate 20% 0-37,500

Higher rate 40% 37,501 to 150,000

Additional rate 45% over 150,000

CAPITAL GAINS TAX FOR INDIVIDUALS

2019/20

Annual Exempt Amount 12,000

Rates

Gains on other assets 10% and 20% (for higher rate income tax payers)

(10% where entrepreneurs relief is claimed)

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